The Digital Mona Lisa
A fan recently bought a NFT of LeBron James dunking for over 200,000 dollars. Digital artist Beeple sold a collage of the digital artworks he made every day for 5000 days, for 69 million dollars. A pizza shop in Los Angeles sold a digital piece of artwork which for the owner, means free pizza for life. The new trendy technology has taken over the internet in a storm, with people buying them for incredibly high prices. But what makes a digital piece of art so special?
An NFT is a non-fungible token, or in other words, a one-of-a-kind currency on blockchain. An NFT, in contrast to real life collectibles, is bound only by digital format. Anything that can be digitized can be sold as an NFT. While this does not guarantee a large price tag to each and every NFT, these tokens have no intrinsic value to them. The ridiculous prices on NFT’s do not stem from how beautiful or pretty they are, but the ownership of that original piece of artwork.
The Value to NFT’s
Buying an NFT also does not ensure sole rights to that piece of work. As is the case with many things, it can be shared on the internet. However, the difference between right-clicking a digital piece of art and saving it to your computer and the actual NFT is vast. You could always take an incredibly high resolution picture of the Mona Lisa, or an incredibly accurate replica, but it will never be the Mona Lisa. The incredible value of the Mona Lisa no longer stems from simply the artwork, which is undoubtedly beautiful, but more so the fact that it is the Mona Lisa, and its one of a kind nature.
Buying an NFT is more akin to buying a certificate of authenticity to a piece of artwork, as well as the rights of ownership to the original. Similar to the Mona Lisa, NFT’s also derive their value from their originality and authenticity.
Replicating the originality of the Mona Lisa in a digital format is no simple feat, but is enabled through the rapid advancements being made in cryptocurrency. Any NFT holds a unique bar code or “token” on the blockchain, the system which enables cryptocurrency. This unique bar code allows tracing of its transaction history, and verification of its authenticity. The bar code is often the most valuable part of the NFT.
Blockchain
Blockchain is a type of database, one that holds the records of every purchase made using cryptocurrencies. It follows the idea of decentralization, creating a currency that no government or nation can control. By storing data across computers tied to no central organization, no one can control, duplicate or hack the currency. In terms of NFT’s, this ensures that nobody can create fake NFT’s by hacking the blockchain.
Since NFT’s are held on the blockchain, purchasing one also requires cryptocurrencies. Most online NFT marketplaces function as auction markets, where you bid with crypto, and the last man standing wins it all. Minting an NFT is also relatively easy, but does not guarantee a profit. You can make an NFT of just about anything, as long as you can upload it digitally. As NFT’s become more and more popular, even if you aren’t interested in buying or selling them, they will quickly evolve into incredible methods of building your wealth, similar to artwork.
NFT’s are quickly becoming more and more popular, but still remain a volatile investment option. Unless you hope to make quick money, there is no guarantee to long term success. If the hype dies down, prices could fall significantly, faster than stocks or any cryptocurrency. However, their unrivaled potential in all fields, also makes them the frontrunner for some of the most interesting technologies of the year.
