In early March, a tech company bought a $ 95,000 work of art. Then the executives set it on fire. At the end of the show, which was shared live on the Internet, the group released a copy of the art, this time in digital format. The creation, by the elusive British artist Banksy, was called “Morons (White)”.
As for the digital format, it is generating more publicity than painting and burning it together. It’s a type of technology on the rise called a non-fungible token, or NFT. Think of an NFT as a one-time proof of ownership over something you normally can’t hold in your hand: a digital artwork, a digital coupon, maybe a video clip. Like digital art itself, you can’t hold an NFT in your hand either: it’s a unique code, stored and protected on a shared public exchange.
However, some NFTs are making millions of dollars. Investors, futurists, and financial reporters are in an uproar, and companies large and small are launching NFT for profit, advertising, or some of both.
Along with the stunt company Injective Protocol did with its Banksy is the NBA, which recently launched Top Shot, an online marketplace that sells video clips of game highlights. Those clips – think of a classic LeBron James dunk – are priced varying by rarity, and they all come in NFT format. Buyers collect them and sometimes resell them for tens of thousands of dollars, much like digital business cards.
A Los Angeles pizzeria has launched an NFT that, for one lucky owner, translates to free cakes for life. And an artist named Krista Kim recently sold a virtual house, dubbed the Mars House and created in NFT format, for around $ 500,000.
The uproar surrounding NFTs may seem similar to another highly publicized phenomenon known as. People who are excited about one tend to be interested in the other, and that’s because the technology is related. If you’re thinking of buying NFTs, or if you just want to sound smarter when talking about them, here’s what you need to know.
Wait, what is bitcoin again?
So what is an NFT? To understand them, it helps to know the basics about digital currencies.
In its simplest form, digital currency is a type of money. With varieties including bitcoin, ethereum and dogecoin, it is a; It can be stored in an online account, on a USB drive, or in a digital wallet application on your computer or phone.
The value of digital currency goes up and down on online exchanges like Coinbase. Thoseit’s bad news for people looking for a low-risk investment option.
But there is also good news about digital currencies: they are almost impossible to counterfeit. Bitcoin, for example, relies on a shared public ledger called a blockchain, which uses sophisticated cryptography to ensure that the currency is authentic. A blockchain makes hacking very difficult because every transaction is recorded on a huge decentralized network of ledgers; the attackers would have to control a large part to do any damage.
The hype of digital currency has steadily increased in recent years, regardless of its value at any given time.which will accept bitcoins as payment for a car.
Digital art with a twist
In March 2021, the year-on-year value of bitcoin was skyrocketing. A single bitcoin could recover. It was clear that cryptocurrency technology could come in handy in the right hands.
In the meantime, almost all of us have had some experience with virtual assets. Think of video games, digital illustrations, logos, photos, animation, music, and video clips. Data, including spreadsheets, also count as an asset, anything in digital form that comes with the legal right to use that asset. Even coupons get the digital treatment today.
Of course, this kind of digital stuff can be quite easy to hack. Taking a screenshot of a copyrighted photo is as simple as pressing two or three buttons on the keyboard at the same time. Copyrighted music is commonly used in unapproved music videos. Artists can, and do, claim damages if someone uses a copyrighted work without permission, but the process can be time-consuming and expensive.
Enter the NFT or NFT token. The basic concept of the non-fungible token: uniting the world of digital assets with the security of cryptocurrencies. It’s a digital asset plus a certificate of authenticity plus legal rights all rolled into one. Buying an NFT means buying a hacker-resistant public proof of ownership on a specific digital asset.
Could someone still painstakingly copy that digital asset? Of course. But they can’t so easily hack into its provenance, and that, theoretically, is what gives an NFT value.
This is not money, but it can cost you
Like bitcoin, non-fungible tokens rely on the decentralized power of blockchain technology to verify their authenticity. But unlike bitcoin, they are not tradable. You can’t trade in any old NFT for a car or pizza, because each NFT is attached to a specific digital asset: a coupon, a work of art, a collection of trading cards.
Each bitcoin has the same value at the same time. Not so with NFTs. In short, think of an NFT as a unique digital version of a certificate of authenticity, publicly stamped by the blockchain.
Some investors are betting big on the NFT market and NFT art, waiting for its value to skyrocket. Others are buying NFT strictly for publicity, bragging rights, or just to join a new community. Some NBA Top Shot advocates admit that many of the featured videos it sells can be viewed anytime, by anyone, on YouTube. But they like to belong to the Top Shot community online, or they like the opportunity for an investment whose price could skyrocket.
And the first NFT tweet from Twitter founder Jack Dorsey recently sold at auction for, yes, really, $ 2.9 million … although you can view that same tweet anytime you want, right on Twitter. (Dorsey donated the proceeds to charity).
As for the future of NFTs, emptor warning – beware of the buyer, especially if, unlike the executives of Injective Protocol, you have no money to spend. If the hype dies down, and it could, at any moment, the value of an NFT could fall as easily as a stock or, yes, a unit of bitcoin.