- An NFT is a ‘one of a kind’ asset in the digital world that has no tangible form.
- NFTs can be traded through specialist online marketplaces.
- The very first tweet by Twitter founder Jack Dorsey sold for more than US$2.9 million.
By Josh Gliddon
1. As Bitcoin was to the 2010s, NFTs are to the 2020s
Ten years ago, there was some question about whether Bitcoin and other digital currencies were a flash-in-the-pan or something more substantial. Fast-forward a decade and Bitcoin is worth startling amounts of money.
Bitcoin uses a technology called blockchain to verify the authenticity of each coin. A blockchain is a string of unique digital information, stored across a network of computers. Each time a verified interaction takes place, a new block of unique digital information is added.
Non-fungible tokens (NFTs) are the latest trend to hit the blockchain. They are a ‘one of a kind’ asset in the digital world that can be bought and sold but have no tangible form.
“[Non-fungible tokens] are a ‘one of a kind’ asset in the digital world that can be bought and sold but have no tangible form.”
NFTs can be made of just about any digital good including music, digital art, video highlights from sports games, video game characters – you name it. The authenticity of the digital work is guaranteed by the blockchain, so buyers can be confident they’re getting something original.
2. NFTs can sell for big money
The video “Charlie Bit My Finger”, which was uploaded to YouTube in 2007 and went viral, sold for nearly US$761,000 as an NFT in May 2021. The video, in which baby Charlie bites brother Harry’s finger, has had more than 884 million views.
Other examples of NFTs include the very first tweet made by Twitter founder Jack Dorsey, which sold for more than US$2.9 million, and a digital-only artwork by Beeple (Mike Winkelmann), “Everydays: The First 5000 Days”, which was sold by Christie’s for US$69 million in March to blockchain entrepreneur Vignesh Sundaresan, aka MetaKovan.
Picture: Blockchain entrepreneur Vignesh Sundaresan, aka MetaKovan, bought digital artwork NFT “Everydays: The First 5000 Days” for US$69 million.
3. Where are NFTs sold?
Most NFT platforms require buyers to have a digital wallet and use cryptocurrency platforms. OpenSea is one of the world’s largest NFT marketplaces and includes categories for art, music, sport, collectables, trading cards and more. It also has a Virtual Worlds category where you can buy and sell digital real estate and wearables for online universes such as Decentraland and Somnium Space. NFT marketplaces such as Nifty Gateway and SuperRare curate their offerings. Others, such as Rarible and Mintable, let any user upload and sell digital goods as NFTs.
4. The NFT bubble may have already burst
NFT sales hit a peak on 3 May this year, when US$102 million worth were sold in one day. But in the last week of May, there were just US$19.4 million in sales, according to an analysis published on protos.com. The number of active NFT wallets also dropped from more than 12,000 at the market peak to just 3900 at the start of June.
5. Blockchain isn’t without its problems
There are environmental concerns about the blockchain – in particular, the amount of energy needed to power networks of computers and data centres. While NFTs don’t require the same computing effort to create as a Bitcoin, there is still an energy cost, and currently a lot of that power comes from fossil fuels. Until the world shifts to 100% renewable power to run its data centres and computers, this will remain a problem.
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