What are NFTs?

NFT Image on the front page

NFT, this new term is invading articles and conversations. In our article, find out what you need to know to understand this phenomenon.

What is an NFT?

An NFT (Non-Fungible Token) or JNF is a Non-Fungible Token in the sense that it cannot be replaced by something similar . It is valued data made up of a type of cryptographic token that most often represents a digital object such as an image or video, to which a digital identity is attached. The application, the property titles, the shares and the crypto-currencies used are registered in a digital contract: the Smart Contract.

NFT non fungible token
                           Photo credit @Adrian Vidal

Transaction authentication is validated using the blockchain protocol, which is made up of blocks corresponding to each transaction.

The blockchain is a kind of ledger, which can be consulted by all when it is public, and which records all the network's actions from the outset. It is validated by a consensus of users who validate transactions.

NFT is not interchangeable, and its value is determined bysupply and demand.

When were the NFTs created?

NFTs first appeared on the Ethereum platform in 2015 thanks to the game Etheria. By December 2017, they were all the rage thanks to "cryptokitties", a game that offers the chance to collect unique cats.

The movement began to gain momentum when Twitter creator Jack Dorsey offered his first tweet for sale on the platform for $2.9 million .

                               Source @stampaprint.fr

What is an NFT used for?

An NFT is neither a work nor a file; it's a certificate. These tokens include links in their metadata that point to a work. This means that any digital creation can be collected and privatized. Since NFTs are unique, the associated sense of rarity can increase interest in some, and drive up their price.

What does French legislation say?

To date, NFTs are not subject toany specific regulations. They are subject to the provisions of the PACTE law.

The sale of an NFT does not entail any automatic transfer of the related intellectual property rights. When a buyer acquires an NFT, he is not buying the work itself, but a reproduction of the work inserted in a blockchain. Taxes apply when selling crypto-currencies for euros.

To sum up:

  • NFT is purchased with crypto-currencies and held: its value is to be integrated with that of the global crypto-currency portfolio (wallets specific to these currencies).
  • NFT is sold against crypto-currencies: the amount is added to the global crypto-currency wallet (specific wallets for these currencies).
  • Crypto-currencies are sold for euros: the 30% capital gains tax applies.

What are the most attractive areas?

NFT - eton Non Fungible
                                                                         Photo credit @Gremlin

Art and entertainment were among the first sectors to embrace the phenomenon, but NFTs offer multiple possibilities for a wide range of sectors. In the art world, they enable digital artists to store, authenticate and sell their works.

In the luxury goods sector, they activate three highly prized levers:authenticity, rarity and customer experience. LVMH has joined forces with Richemont to develop the first international luxury blockchain: the Aura Blockchain Consortium.

It proves the authenticity of items and traces their origins from raw materials to the second-hand market.

One French collector has even scheduled an IRL(In Real Life) event, sponsored by Le Monde and Télérama, to showcase his virtual acquisitions. You can also visit the "Crypto Art" museum.

Beyond art, NFTs are infiltrating theinsurance andautomotive worlds.

We're also seeing an abundance of experimentation, with many projects in the pipeline, particularly in the retail sector. After two years of testing, Carrefour has purchased plots of land on The Sandbox metaverse. The use of this plot has not yet been defined, but it will not be used to reproduce a virtual store or e-commerce platform.

For the record, Carrefour has already dabbled in these pixelated worlds. Last year, with the help of Publicis, the retailer created a space on the game Fortnite, in which avatars were invited to mix healthy products (fruit, vegetables, etc.) to earn life points and win battles. In Taiwan, in 2020, Carrefour also used the Nintendo game Animal Crossing to promote its Act For Food program on food transition..

Recently, Julian Lennon put NFTs of Beatles memorabilia up for sale and raised nearly $160,000. It's a safe bet that the music industry is about to catch on.

The NFT market looks very promising, and the fact that the European market authority wants to ban Bitcoin mining under the guise of complying with the Paris Agreement and thereby reducing its energy expenditure doesn't seem to worry stakeholders any more than that.

By Claire Jagodzinski


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