What are NFTs? 6 Facts That Explain The Meaning

NFTs

Every now and again, an acronym (say, PPE) appears and seems to be everywhere. The most recent is NFT, which stands for something that needs no explanation: non-fungible token. We’ll get into the specifics later, but here’s an example: Injective Protocol, a group of financial traders, paid $95,000 for an original Banksy screenprint and then burnt it to ash. A video of the devastation is currently on sale for 22.5 NFTs, or about $34,421. Banksy has yet to reply publicly, but he can’t really complain; the mysterious artist famously ran one of his paintings through a paper shredder just before it sold for $1 million. Taglialatella Galleries, which sold the art to Injective Protocol, is also working on developing its own NFT application.

Other troublemakers may be found in the NFT arena (like the infamous YouTuber Logan Paul, for one). However, the art world has a constantly rising presence on NFT networks, which extends to the most daring aspects of the music business. The money has recently entered public attention, due in large part to Grimes: Earlier last week, the artist earned $389,000 on a 50-second music video. So far, she’s made roughly $6 million from digital art sales in the format. Meanwhile, Kings of Leon made history by being the first band to release an album in the form of an NFT.

You don’t have to be an artist to participate. Look no farther than Mark Cuban for evidence. The owner of the Dallas Mavericks sold one of his own tweets for over $1,000 in what was maybe the laziest and most weird transaction in NFT history. It’s unclear why someone would pay so much for information for something that anyone with internet access can download—especially because the tweet, which linked to a blog article, wasn’t popular, clever, or amusing. Consider the following: A print or poster of a Kehinde Wiley artwork is available to everyone. You can even download a picture of a Wiley from the internet and put it on your wall if you’re skilled enough, but the finished piece would be worth nothing more than the frame it was placed in. However, only one individual may possess the original Wiley artwork, which is worth the whole sum of money. Possessing an NFT is the digital equivalent of owning the original masterpiece rather than a print.

Selling your own tweet can’t be that difficult, can it? Take the first step by learning what an NFT is.

What is an NFT?

As the Wall Street Journal very helpfully explains in their YouTube series Cryptocurrency for Beginners, things like air and water have objective value, meaning they’re inherently important. The importance of things with subjective value, on the other hand, is dependent on a person’s beliefs, perceptions, or preferences. Think limited-edition sneakers, collectible cars, and rare baseball cards.

NFTs naturally fall into the latter category. As for the “fungible” part, that means anything with value (known as an asset) can be easily swapped with another asset of the same type. NFTs are non-fungible, so they can’t be equally exchanged or divided up. In other words, you can easily exchange USD into Yen, but a collector can’t fully equally exchange their Warhol collection for an equally-valued Picasso collection. Bitcoins are like USD, NFTs are like those Warhols. (In theory, anyway.)

To recap: An NFT, as WSJ sums it up, is “a digital representation of a unique asset that cannot be equally swapped or traded for another NFT of the same type.” Most commonly, that’s in the form of digital art, though tokens can also represent goods and services, or things like tickets. Storing the tokens and controlling the data isn’t limited to one person, place, or company. Instead, tokens exist in networks that are all about transparency. The data is available to the public, meaning you can trust that it’s accurate and that a token is authentic, virtually indestructible, and completely your own.

1. Why are people going so crazy about them?

It’s a fascinating new place for people who are tired of Bitcoin and those who collect. Networks make their backends public, which prevents counterfeits from being listed. One of the most popular, Ethereum, allows users to bundle tokens to save transaction costs.

NFTs, unlike physical items, cannot be lost, destroyed, or stolen. To do so, a whole worldwide network would have to be brought down, which is basically impossible.

2. What kind of people buy NFTs?

The tech/blockchain bro community, as expected, as well as any form of collector in general. People who used to spend thousands of dollars on rare Japanese toys and KAWS figurines are now paying for NFTs. Then there are online superstars like Logan Paul, whose Pokémon card unpacking live-stream received 3.9 million views in just a week. (He subsequently marketed personalized digital Pokémon cards with his face placed on them as NFT.) And there is a big ecosystem of individuals who produce and purchase digital art but do not have access to the more elite fine art world—and, more significantly, do not seek their approval.

3. Is the art ugly?

It all relies on your taste, much like paintings in a museum or gallery. In any case, you won’t come across a forgery.

4. Is fashion involved in any of this?

There is a lot of crossover between the business and the hypebeast collector base, although slowly and inexorably. So far, fashion has mostly consisted of costumes for characters in video games such as Fortnite or Pokémon. Gucci and the North Face have previously collaborated with Pokémon Go, so an entry into NFT is imminent. Keep an eye out for a Balenciaga NFT drop as well: the brand just released its own video game. If and when it happens, you can be certain that none of it is a forgery.

5. Where can I buy NFTs?

Go to the OpenSea website, which is now the most popular NFT market. Everything from Kings of Leon images to video game accessories to domain names is included. Changing your Fortnite look might cost as little as 0.02 tokens.

6. When will the NFT bubble burst?

We have no idea. However, if you do, sell the information for millions of Bitcoins.


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Dom Lucre