I feel it is about time that we discussed NFTs and Smart Contracts. Someone recently requested a post on this subject so I am providing it here. However, I didn’t really understand them myself until recently. In this post I clarify what the NFT (or Non-Fungible Token) is and also how the smart contract proves your ownership of the non-fungible token. We will also discuss what the Blockchain is and how you can prove ownership of your smart contracts through the Blockchain. Furthermore, we will also discuss how NFT’s will apply to you as a musician…so read on!
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What are Non-Fungible Tokens
NFT’s or Non-Fungible Tokens are a mystery to many. However, lots of people are talking about NFTs and smart contracts. They have become big news over the last year. The word fungible sounds like a nonsense word. The real definition of non-fungible tokens is basically tokens that are unique and you cannot replace those particular items.
What Kinds of Items Apply to Non-Fungible Tokens
Although items can be copied from one item to another, an item can be differentiated by various different characteristics. For example, a coat ma have a small tear on the seam under the armpit. It may have a name in it such as “John Smith”. This makes the coat unique. Although, if John Smith owns a coat with his name sewn into the back of the neck and he has a tear under the armpit, you can have John Smith’s coat.
This works out pretty well. Non-fungible items that can be worth something could be the boots your favourite soccer player wears when he scores a hat-trick in the cup final. It could be the guitar that your favourite guitar player plays at a world-famous gig.
What Products Apply to NFT’s and Smart Contracts?
However, NFT’s and smart contracts are useed mainly for digital products. I know that every digital product can be reproduced in seconds. This is where smart contracts come in. You don’t have smart contracts for physical items such as those listed above. They are only for digital products.
Well-known products that have sold for serious amounts of money include the first ever Twitter tweet. This went for almost $3 million. Furthermore, one image went for $69 million.
How do Smart Contracts Prove Ownership?
Owning a Non-fungible token can be proven through something called the Blockchain. The Blockchain works as a banking system which electronically records the purchase of NFT’s and smart contracts. Therefore, if you want to spend $6 on pizza, this system will record that.
Are There Any Differences Between the Blockchain and Your Regular Banking Systems?
There is a big difference between using the Blockchain and your regular banking system. This may put you off using the Blockchain. The main difference is that ownership of your NFT is recorded for anyone in the world to see on the Blockchain. Therefore, you can prove that you own an item as it will show up on the Blockchain.
This may put you off. Who wants to know how much you are spending? Do you really want other people to know what you are spending? However, it does prove your ownership. In fact, this is the only way to prove that you own certain digital products.
Do NFTs and Smart Contracts Use Real World Currency?
The short answer to this question is, no. They use a cryptocurrency and not any real-world currency. Personally, I don’t believe in cryptocurrency. You don’t walk into a shop and ask how many bitcoints they will accept. You always use the local currency. Therefore, in the USA, shops use the dollar. In the UK they use the pound. If you’re in the Republic or Ireland or somewhere else in the European Union, there is a good chance that you will be conducting business in euros. You don’t barter at the market, with bitcoin. It just doesn’t happen.
How Do NFT’s and Smart Contracts Apply to Your Music?
This can actually work out pretty well for you. This is because music can generate royalties. If you purchase NFTs in music and that music is played on a radio, film, TV, etc, you will be paid royalties for the numbers of people who listen to the music, etc. Ownership of Non-Fungible Tokens in music will give you the rights to make money from it. You have 100% of the rights to sell that music through production music libraries and make 100% commissions.
NFTs and smart contracts in music don’t only apply to music itself. If you want to purchase a logo, you can do so. This would also give you the rights to sell those logos. Therefore, whenever someone downloads and uses your image, you will get paid.
Example of a Blockchain
One example of a Blockchain is Ethereum. Their currency is known as the ETH. This is just another cryptocurrency. As I mentioned before, I don’t really believe in cryptocurrency. They are worthless in your high street shops. That makes it a big waste of money in my view. However, some people really do value this currency.
Conclusion to this post on NFTs and Smart Contracts
The advantages of owning music as NFTs mean that you have the rights to generate royalties from it. If it is used by a library or license that music for film and TV, your ownership will give you that permission.
On the downside, is cryptocurrency just a waste of money. Do you believe in bitcoin? Personally, as I have said, I don’t believe in this currency. However, if you want to go ahead, go ahead.
Thank you for reading this post on NFT’s and smart contracts. If you would like to check out any of my other recent post, please choose from the list below…
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