What Is an NFT?: What to Know About Crypto's New Art Obsession
Every so often, an acronym (say, PPE) pops up and is suddenly seemingly everywhere. The latest is NFT, which stands for something that isn't any clearer: non-fungible token. We’ll get into the nitty-gritty below, but here’s an example: A group of financial traders called Injective Protocol put down $95,000 on an original Banksy screenprint, then burned it to a crisp. A video of the destruction is now available for 22.5 NFTs, or roughly $34,421. Banksy has yet to publicly respond, but he can’t exactly complain; the anonymous artist once put one of his works through a paper shredder, at the very moment that it sold for £1 million. As for Taglialatella Galleries, which sold the work to Injective Protocol, it’s in the process of creating its very own NFT program as well.
There are other troublemakers in the NFT arena (like the infamous YouTuber Logan Paul, for one). But the art world also has a steadily growing presence on NFT networks, which extends over to the more adventurous sides of the music industry. That’s thanks in large part to Grimes that the currency has entered mainstream discussion in recent days: The musician made $389,000 off a 50-second music video earlier this week. So far, she’s amassed around $6 million from sales of digital art in the format. In the meantime, Kings of Leon became the first band ever to release an album in the form of an NFT.
You don’t have to be an artist to join the fun. For proof, look no further than Mark Cuban. In perhaps the laziest, most bizarre sale in NFT history, the owner of the Dallas Mavericks sold one of his own tweets for nearly $1,000. Why anyone would pay so much for metadata for something that anyone with internet access can download remains open to debate—especially because the tweet, which linked to a blog post, was neither viral, smart, nor funny. Think of it like this: Anyone can own a print or poster of a Kehinde Wiley painting. If you're crafty enough, you can even download an image of a Wiley from the internet and hang it on your wall, though the resulting object would be worth little more than the frame it was placed in. But only one person can own the actual original Wiley painting, and that's the thing that's worth all the money. Owning an NFT is sort of like the digital equivalent of owning the original masterwork instead of a mere print.
Selling your own tweet can’t be that hard, right? Take the first step—learning what an NFT actually is—here.
What is an NFT?
As Crypto Casey very helpfully explains in her 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 Crypto Casey 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.
Why are people going so crazy about them?
It’s an exciting new space for those bored with Bitcoin, and for those who collect. Networks keep their backends public, which prevents listing counterfeits. And one of the most popular, Ethereum, lets users bundle tokens, thereby avoiding transaction fees.
Unlike IRL goods, NFTs can’t be lost, damaged, or stolen. Doing so would require taking down an entire global network, which is essentially impossible.
What types of people are into NFTs?
As you’d expect, the tech/blockchain bro communities, plus any type of collector in general. The hypebeast-y sorts who used to spend thousands of dollars on rare Japanese toys and KAWS figures are now shelling out for NFTs. Then there are the internet celebrities like Logan Paul, whose Pokémon card unboxing live-stream racked up 3.9 million views in less than a week. (He then turned around and sold custom digital Pokémon cards with his in face superimposed on as NFT.) And there’s a large ecosystem of people who create and buy digital art and don’t necessarily have access to the more elitist fine art world—and importantly, don’t seek their approval.
Is the art... good?
Like art in, say, a museum or gallery, it all depends on your taste. In any case, you’re guaranteed not to encounter a fake.
Is fashion part of all this?
Barely, but inevitably; there’s a lot of crossover between the industry and the hypebeast collector base. So far, fashion’s presence largely consists of outfits for characters in video games like Fortnite or Pokémon. Gucci and the North Face have already teamed up with Pokémon Go, so a foray into NFT seems likely. Keep an eye out for a Balenciaga NFT drop, too: The house recently created its very own video game. If and when it does, you can be sure none of it is counterfeit.
Fascinating. Where do I start?
Head to the website OpenSea, which is currently the most popular NFT market. Listings include everything from the Kings of Leon imagery to video game accessories to domain names. Changing up your Fortnite aesthetic can cost as low as 0.02 tokens.
When will the NFT bubble burst?
We don’t know. But if you do, sell the intel for a million Bitcoin.
