Decentralised Non Fungible Token (DNFT)

Context:

Decentralised non fungible token (DNFT) has opened a new avenue for revenue for the film industry, which witnessed a decline in the number of movie-goers post-Covid. 

• This innovative technology has been introduced by UK-based Techbank Movies London, which offers production houses an opportunity to monetise their content. 

Benefits of Decentralised Non Fungible Token (DNFT)

• A Viable Alternative: Decentralised non fungible token (DNFT) has been positioned as a viable alternative to Non Fungible Token (NFT). 
• Selling NFT Rights: DNFT offers production houses an opportunity to sell the NFT rights of the same to generate additional revenue. 
• High Demand: There is a huge demand for copyrighted protected materials at the international level and DNFTs of such materials would definitely find buyers.
  • The demand for DNFT will increase with the growth of web3 technology. 
    • In India, currently, there are around 120 million web3 wallet users which store digital assets such as cryptocurrencies and NFTs.

About Non Fungible Tokens (NFTs)

• A Digital Asset: Non Fungible Token (NFT) is a digital asset that represents ownership or proof of authenticity for a specific item, often in the form of digital art, music, videos, or other digital content.
• Working: NFTs operate on blockchain technology, which is secure, cannot be duplicated or forged and transparent digital ledger. 
• Hold Record of Ownership: Each NFT is assigned a unique and unchangeable code stored on the blockchain, providing a clear record of ownership and verifying the authenticity of the associated digital asset. 

Key Features of Non Fungible Tokens (NFTs)

• Uniqueness: Each NFT is distinct, making it different from any other token. This uniqueness adds value to the digital asset.
• Indivisibility: NFTs cannot be divided into smaller units. They exist as whole tokens, contributing to their scarcity.
• Ownership and Authenticity: NFTs serve as digital certificates of ownership, proving that the holder is the legitimate owner of the associated digital content.
• Smart Contracts: Many NFTs utilise smart contracts, self-executing contracts with the terms of the agreement directly written into code. 
  • These contracts automate processes like royalties, ensuring creators receive a percentage of future sales.

Challenges Associated With Non Fungible Tokens

• Complexity: The technology and tooling behind non-fungible tokens and the decentralised applications  that underpin them are still nascent.
• Legal and Regulatory Challenges: Non Fungible Tokens (NFT) has no recognized legal definition anywhere in the world. Different nations are forging forward with various classification schemes for NFT.
• High Consumption of Energy: They have a significant environmental impact, as they consume a lot of energy and generate a lot of emissions.  
• Prone to Speculation: They are subject to market volatility and speculation, as the prices and demand of NFTs can fluctuate rapidly and unpredictably.
• Counterfeit and Fraudulent NFTs: There have been instances of fraudulent NFTs, which undermines trust in the NFT ecosystem and raises concerns about counterfeit NFTs circulating in the market

Popular Examples of Non Fungible Tokens (NFTs)

• Digital Art: Artists can tokenize their digital artwork, allowing collectors to buy and own unique pieces.
• Music and Videos: Musicians and content creators can release limited edition NFTs, providing exclusive access or ownership to their fans.
• Virtual Real Estate: Some virtual worlds use NFTs to represent ownership of digital land or virtual items within the virtual space.

News Source: The Hindu

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