Exploring NFT Terms in Last Year's 15 Trillion Won Transaction Volume

Photo by SKT Newsroom

[Asia Economy Reporter Lim Hye-sun] Non-Fungible Tokens (NFTs) are a hot topic. SK Telecom has explored the concept of NFTs and related terminology.

According to SKT on the 16th, the annual NFT transaction volume last year was $13 billion (15.4 trillion KRW). This figure represents more than a 200-fold increase compared to the previous year. The Consumer Technology Association (CTA), which hosts CES, also set NFT as one of the exhibition themes at CES 2022.

NFTs are blockchain-based tokens that cannot be exchanged or duplicated, possessing uniqueness and scarcity. NFTs are called "new digital assets" because they can create a certificate in the form of a cryptographic proof that prevents replication and forgery of digital files such as videos, images, and music.

◆ Blockchain = A distributed data storage technology that prevents hacking that may occur during virtual currency transactions. The reason NFTs use blockchain to issue tokens is that storing ownership records and transaction history information on blockchain tokens makes forgery and alteration impossible.

◆ Minting = Minting is the issuance of NFTs, creating NFTs of digital assets such as images and videos. The term originates from the English word "mint," meaning "to coin money." Digital files are uploaded onto the blockchain, and a blockchain wallet is used to connect and register the file as owned by the user.

◆ Drop = Drop refers to uploading NFTs to an NFT marketplace to sell them to others. Airdrop is providing NFT works for free.

◆ Listing = The process of registering NFT works on an NFT exchange to sell them.

◆ OpenSea = OpenSea is the world's largest NFT marketplace based on the Ethereum platform where NFTs can be issued and traded.

Ownership and Copyright of NFTs = Generally, purchasing an NFT does not transfer copyright to the buyer. NFTs represent ownership, but do not include copyright. Therefore, buying an image NFT does not allow commercialization such as producing merchandise for secondary or tertiary sales. However, exceptions apply if the seller includes copyright in the NFT issuance terms.

◆ Dapper Labs = Dapper Labs is a leading developer pioneering the NFT field and creating the industry. It gained significant attention by developing blockchain-based cat breeding game CryptoKitties and NBA Top Shot as NFTs. Dapper Labs created its own blockchain platform called FLOW.

◆ NFT Smart Contract (Conditional Automatic Contract Execution) = A system that records contract conditions on the blockchain and automatically executes the contract when conditions are met. With the launch of second-generation blockchains represented by Ethereum, automatic transactions with conditions, i.e., "smart contracts," became possible.

◆ Whitelist = The right to purchase NFTs cheaply at an early stage. It means guaranteeing certain benefits or rights, selecting people who show interest early in the project, granting them NFT minting rights to encourage voluntary promotion and activation.