From recent developments in artificial intelligence (AI) to virtual reality (VR) to blockchain technology, the tech world is progressing at an impressive speed and it’s waiting for no one. I’ll catch you up. NFTs are the future. This may sound like a stretch but hear me out. First of all, if you’re coming across this concept for the first time, you are welcome. If on the other hand you have already heard of this before and are looking for some sort of explanation, take a seat please. Let’s get started.
Here’s what you need to know. The acronym NFTs stands for non-fungible tokens. When something is said to be non-fungible, this means that it cannot be interchanged for another of similar kind. Unlike other cryptocurrency which are exchanged for their value, NFTs are unique digital assets on the cryptocurrency blockchain that cannot be interchanged or replicated. NFTs exist on the blockchain just like other cryptocurrencies, specifically on the etherum blockchain but it can exist on others too and that’s as far as their similarities go. An NFT would give ownership to whoever is in possession of it and what it contains, which leads us to the question, WHAT do they contain? I’ll tell you.
Although NFTs have been in existence since the 2010s they are now coming up fast as a method of selling, buying, and collecting art. Digitally to be precise. NFTs could range from things as valuable paintings and real estate to things as basic as GIFs and videos. I know. I know. Now, don’t get me wrong, other things can be minted as NFTs too but in the art and gaming world this is a major game changer for both artists & collectors. A new way to take possession. A new flex. Investors aren’t left out too as it can serve as a form of investment for those interested in making money in a cool, unusual way. On the other hand, instead of just being kept, NFTs can also be bought and then resold for a higher price. This is known as flipping and it’s another great way to profit from the trade. As we all know that the value of art and collectibles tend to increase rather than decline. NFTs could also represent real items in digital files and they’re selling at impossible prices as well.
The NFT market has grown so much that it amassed over $2.5 billion in sales during the first half of 2021. In the past 24 hours over 80,000 NFTs have been bought. On March 11, one of the most expensive NFTs sales to date took place. Beeple’s Everydays — The First 5000 Days NFT artwork auctioned at Christie’s for a whopping $69 million. The New York times also published an article called “Buy this column on the blockchain” which explained NFTs and went ahead to sell as an NFT for $555,289. Wild. Then again, the first tweet on twitter was auctioned by its founder Jack Dorsey as an NFT for $2.9m to Sina Estavi. A Lebron James highlight was equally minted as an NFT by NBA Top Shot, and it sold for about $387,600 at the auction. My favourite sale so far is by Emily Ratajkowski, who sold an NFT titled “Buying Myself Back” which contains an image of her standing beside a picture of her taken by Richard Prince which he had used without her consent for his portrait series in 2014. The model, Emily, had to buy his own copy of her image for about $81,000. By auctioning the NFT of her standing beside the viral photo, she claims her power back and earns a huge profit. This story shows the range NFTs gives to artists and how it can really empower them to own their craft. Now although the big numbers have been highlighted a lot of small-scale sales are also made as some NFTs start off selling for low as $15. What more can I say, really?
What’s crazy is some of these images, paintings, tweets etc. are accessible to the public and so the million-dollar question becomes why buy it for so much money? Bragging rights. Yes. As explained earlier NFTs represent real life items but digitally. So, for example a digital file of a painting can be minted as an NFT. What would be transferred to the buyer is a digital file containing the painting and proof of ownership. Copies of this painting may exist and be “accessible” to everyone but the owner possesses a unique token associated with the file, identifying them as the owner. It’s the same way there’s millions of copies of the Mona Lisa but just one person who possesses the original. The NFT would contain data to verify ownership and may still retain copyrights and reproduction right to the artist/creator. An NFT can only have one owner at a time as well as a record of previous owners and that’s part of what makes it so unique.
The more it’s explained the crazier it seems and I think it should be explored for that same reason. Why are people paying millions of dollars for a file that shows they own an item almost everyone has seen? Well, times have changed. Everything is online these days. Why own tangible things when you could have ownership of them in the digital space? In place of buying items that represent wealth like a Birkin or a Rolex, a Cryptopunk NFT can be bought and uploaded as a profile picture to pass across the same message. NFTs are in the process of revolutionizing the art and science scene with these possibilities. They can be bought and sold on sites like Opensea, Foundation, Rarible, Grimes Choice’ Nifty Gateway etc.
Unfortunately, like everything else with amazing advantages, NFTs come with pretty great disadvantages as well. First off, the precedence set has made it obvious that it is an expensive trade to dabble in like almost everything in the tech world. Owning an NFT is luxury available to only those who can afford it. As an investment too it could be capital intensive. Then again, the environment/climate should also be considered as the energy/electricity used up in creating or minting an NFT is quite large. The result of this is more greenhouse gas emissions and the rate at which it’s becoming popular signifies danger to the environment. Thankfully, there are people working on a solution to this. Another cause for worry is damage to the files but tangible objects are equally fragile or even more so.
Even with all this information, the reoccurring question on our minds is the sustainability of this new piece of technology. Who’s to say that this isn’t a bubble that would soon burst. What’s the guarantee that there isn’t going to be some sort of crash in the near future? Some people (me included) believe this a great way to bring art home, to support artists we love, to make good money & preserve value etc. Others believe there isn’t much to it, it popped up fast, it’s crazy, getting crazier and it would go down faster. I guess we’ll just have to wait and see but given the information at your disposal, I’d advise you to think carefully about what side of crypto history you’d like to be on.
