Either your teenage kids or someone in the office has uttered the acronym ‘NFT’ around you and, like us, you probably wondered ‘what on earth is an NFT?’. Well, we researched it and can confidently say that NFTs are ‘Non-fungible tokens’. Which means absolutely nothing.
Let’s work through it. “Non-fungible” means that it is a unique item and can’t be replaced with something else. For example, a one-of-a-kind pokemon card, is non-fungible. If you traded it for a different card, you’d have a different pokemon card. NFTs are anything digital (such as drawings, videos or music), but a lot of the current excitement is around using the tech to sell digital art. With NFTs, artwork can be “tokenised” to create a digital certificate of ownership that can be bought and sold. Anyone can be an NFT ‘artist’ and upload their digital artwork for sale. As it is a digital item it can technically be screenshot and copied – you can copy a digital file as many times as you want, including the art that’s included with an NFT.
However, NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork). To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original. Artists can sell work that there otherwise might not be much of a market for, plus NFTs have a feature that you can enable that will pay you a percentage every time the NFT is sold or changes hands, making sure that if your work becomes very popular and balloons in value, you’ll see some of that benefit. In addition, some NFTs may have several original copies for sale or a single original, which allows artists to make more income – think limited edition sneakers.
To give you an idea of cost, some NFTs sell for as little as $300 USD, whilst one buyer paid $390,000 for a 50-second video by Grimes and another paid $6.6 million for a video by Beeple. One of Beeple’s pieces was even auctioned at Christie’s, so this NFT artwork is serious stuff. When we say that buying an NFT gets you some basic usage rights, this includes being able to post the image online or set it as your profile picture on social media. Plus, of course, there are bragging rights that you own the art, with a blockchain entry to back it up. Now, you’ve heard of cryptocurrency and blockchain – Ethereum is a cryptocurrency, like bitcoin, and its blockchain supports NFTs. Ethereum is the first of its kind to do so, however a number of other blockchains can implement their own versions of NFTs, and are beginning to.
But what is it all for? If you can copy the artwork, video or whatever digital asset is being sold as an NFT then surely all you’re buying are bragging rights? Whilst many an art collector owns a piece hanging in a public gallery, it seems a lot of money for something that only exists in a digital space. We wonder if this is another bubble that will soon burst. In the words of former Christie’s auctioneer Charles Allsopp, the concept of buying NFTs made “no sense”.
“The idea of buying something which isn’t there is just strange. I think people who invest in it are slight mugs, but I hope they don’t lose their money.”
So there you have it, you may create your own NFT and make millions, or buy one for millions – at least now you know what on earth an NFT really is.