5 ways non-fungible tokens can impact the video industry Digital art has been the primary driver behind the current NFT craze. However, NFTs have been…
Digital art has been the primary driver behind the current NFT craze. However, NFTs have been issued for a variety of assets (such as collectibles, access rights tokens, and even financial contracts) for a number of years now. Is video going to be the next big push for NFTs? And, will NFTs make enough impact to change the way that video content is created, distributed, and monetized in the future?
First, let’s take a look at what an NFT (non-fungible token) actually is. An NFT is an unique asset that is tokenized on a blockchain (a blockchain is a digital ledger of transactions). Tokenization is the process of issuing a security token on a blockchain to digitally represent an asset.
Today, most NFTs reside on the Ethereum blockchain. Ethereum, similar to Bitcoin, is a cryptocurrency but it’s blockchain provides additional support for NFTs, by storing extra metadata that makes them work differently from an ETH (Ethereum coin). It is because of the uniqueness of an NFT, that their value is created.
For most of us, digital scarcity is a bit hard to wrap our heads around, in the age of copy & paste. The supplies of each NFT are known and you can not fake their authenticity, as the blockchain verifies its origin and all transactions. Yes, someone might be able to screenshot a digital image and share it, but a tokenized NFT cannot be counterfeited and sold/passed off as authentic, because it would be easily verifiable if the original asset had truly been transferred. As NFTs are created on the blockchain; the creation, ownership, and each transaction is verifiable and of public record.
Think about the difference between owning an original physical artwork or a print. Anyone can buy a Picasso print, but there is only one original. This is where the inherent value from an NFTs uniqueness is generated (especially for those serious collectors out there).
How is this really different compared to a fungible (interchangeable) asset, you might ask? A fungible asset, although it may have value, is not inherently unique.
For example, if I am buying or receiving bitcoin, it wouldn’t matter which specific bitcoin I receive, as bitcoins are interchangeable and all have the same value. The bitcoin would go into my crypto wallet, and be intermixed and interchangeable. The same as, if I had multiple US dollars in my wallet they could become intermingled with each other, and every dollar in my wallet would hold the same value. Although they may have different serial numbers, they are completely interchangeable.
Thus, whereas a Bitcoin is fungible, like a dollar bill, and can be intermixed, the additional data on an NFT makes that token, that asset, non-fungible (unique and non-interchangeable).
We believe there are five main ways that NFTs have the potential to impact the video industry:
Let’s explore each of these in turn.
The creation of new/additional revenue streams
True fans were more than happy to pay more and/or buy multiple versions of DVDs for this extra content. Video NFTs provide an opportunity to popularize this again. Especially, when adding elements of hard-capped limits, and the inherent ‘certificates of authenticity’ that NFTs provide.
Let’s say that you wanted to make a 2-minute short and sell an ‘exclusive’ limited run of 100 authentic copies via NFT. If each NFT of the film is sold for $1,000 upon release, you will have made $100,000 in revenue. While reaching mass audiences will likely still be achieved through more traditional distribution and platforms for the time being, creators can use NFTs to potentially generate higher revenue (and more rapidly) than traditional methods.
New ways of marketing and reaching an audience
Monetary incentives for fans
Tokenized rights management
A move towards decentralized storage and distribution
There are a number of exciting opportunities for NFTs to change the world of video. But, in order to have a true impact, there are still a few hurdles and limitations to overcome.
As video files are large, it would be quite a burden to store them on the blockchain itself. One of the more promising solutions is the concept of decentralized storage for storing NFTs. Progress is being made in this area in projects such as IPFS, VideoCoin and FileCoin.
We are still in the early stages as the number of people that have the know-how of buying NFTs is limited to those that are familiar with transacting with cryptocurrency. However the number is growing rapidly as new ways of using it emerge. Stay tuned, we are in the early days of an exciting new frontier.
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