Updated: May 10
You might have heard the letters NFT being thrown around lately and you would be forgiven for having no idea what an NFT is but NFT’S are becoming big business!
So let's start with what an NFT is.
NFT stands for non-fungible token.
In economics, a fungible asset is something with units that can be readily interchanged – like money. However, if something is non-fungible, this is impossible – it means it has unique properties so it cannot be interchanged with something else. If you have a painting, that is a one-off from say…..Michaelangelo (no not the ninja turtle) you can only ever have 1 original of these, you could take a photo of it but there will still only be one.
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own.
The digital tokens can be thought of as certificates of ownership for virtual or physical assets. Normally any digital asset can be duplicated say a photo on Facebook or Instagram can be saved and multiplied but with NFTs, artwork can be “tokenised” to create a digital certificate of ownership that can be bought and sold.
So what stops someone from copying the NFT artwork? Well, nothing really but the original owner is the only person with the “Token” that proves it's the OG.
So let's look at recent NFT deals done! This is where it gets crazy!
On 19 February, an animated Gif of Nyan Cat – a 2011 meme of a flying pop-tart cat – sold for more than $500,000.
A few weeks later, musician Grimes sold some of her digital art for more than $6m.
It is not just art that is tokenised and sold. Twitter’s founder Jack Dorsey has promoted an NFT of the first-ever tweet, with bids hitting $2.5m.
Christie’s sale of an NFT by digital artist Beeple for $69m (£50m) set a new record for digital art.
The NBA and NFT’S
There is a company taking off called NBA Topshots who have fully licensed “moments” and you can purchase an NFT of your favourite moment from the NBA. You can also buy “packs” similar to buying a pack of cards and you open it to see what “moments” you got.
So are NFT’S legit?
There’s a lot of money to be made in the NFT market. But you also may have heard there’s some controversy surrounding NFTs, in particular in relation to their impact on the climate.
NFTs use a monster amount of energy in their creation. So much so that many protesters are worried about the very real impact the craze could have on the environment. We will have to wait and see!