NFT

What do a video of flying cherubs, a burned $95.000 Banksy artwork and digital kittens have in common? A three-letter acronym: NFT. 

NFT stands for non-fungible-tokens and it’s the latest phenomenon that it’s taking over the Internet. Non-fungible means one-of-a-kind, unique, that cannot be replaced. Some people say that NFT can be considered as “digital assets” or “digital goods”, while others say they are nothing more than a simple digital signature. So, what are NFT and how do they work? 

Like the well known cryptocurrencies, NFTs work through a blockchain, that is a sort of control system in which records of transactions are maintained across thousands different computer terminals. If we take into consideration a currency that is fungible, like Bitcoins, the blockchain grants the authenticity of the cryptocurrency and of the transaction: it is what makes the trade between two wallets possible. However, what makes NFT different from standard cryptocurrencies is the fact that the blockchain ensures the authenticity and uniqueness of the tokens but not their interchangeability, since for their very nature NFT are not fungible. The “nifties”, as some people have started calling them, are certificated through specific properties that some blockchains possess. At the moment, NFT mainly exploits the blockchain of Ethereum. 

So, if we try to keep it simple, we can define NFT as digital certificates of authenticity working thanks to a blockchain. Everything can be “made authentic” through the NFT: from a work of art, to a video, to a song or a digital drawing. If you want to prove the uniqueness of a digital property, you need an NFT.

Since it’s only in the last few months that the Internet started to take a serious interest in these tokens, you may think that it’s a fairly new phenomenon, but the technology necessary to create NFT already existed around 2015 and started to gain public interest in late 2017. The first main application of NFT was for a video game called Cryptokitties. The game allowed the user to buy, nurture and then sell unique “digital kittens”. Some of the kittens were sold for more than 150 thousand dollars and the trade was often made with the use of cryptocurrencies. As of right now, the most famous NFT is without a doubt Everydays – The First 5000 Days, a collage made up of 5000 different digitalized work of arts, created by the artist Beeple (Mike Winkelmann), the most famous digital artist in the world. This work of art was the first only-digital asset that the historical and respected auction house Christie’s sold. The transaction was made using cryptocurrencies and the amount paid was of 69.3 million dollars. The buyer didn’t receive anything physical: he bought a JPEG file that can be found in a digital wallet identified by a smart contact address. As we said before, NFT are not only connected to digital art: a gif, a song, a video, a tweet they can all be identified and made unique through the blockchain technology. An example is the NBA Top Shot market: the NBA created a sort of digital trading cards collection so that users can buy and sell limited edition videos of their favorite players, which authenticity and rarity is certified by the NFT. The first ever tweet on Twitter, posted by the founder himself, is worth a couple million dollars in its authentic NFT certified form. 
Like with every digital phenomenon, there are vast and different opinions on NFT that can be divided into two main groups: some people say that NFT are the much awaited and necessary way to ensure copyright and rightfulness of digital contents that are often unprotected; while other people argue that it is nothing but a passing fancy and a speculative bubble that will soon pop. In fact, the market for NFT is witnessing a rapid and steep climb, with the market value passing from 41 million dollars in 2018 to 338 million in 2020. The value is still rising in 2021 and the interest in NFT is just starting to take root between the public. Only time will tell us what awaits in the future of the nifties but one thing is sure: the need to protect digital intellectual property exists and needs to be addressed.

Chiara Notarangelo

Bibliography 

Clark, M. (2021, March 11). NFTs, explained: what they are, and why they’re suddenly worth millions. The Verge. https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
C. (2021). Beeple (b. 1981). Christies.Com.  https://onlineonly.christies.com/s/beeple-first-5000 days/beeple-b-1981-1/112924
Dapp.com. (2020, December 21). 10 Most Expensive NFTs, Hundreds of Thousands for a Crypto Kitty? Medium. https://medium.com/dapp-com/10-most-expensive-nfts-hundreds-of-thousands-for-a-crypto-kitty-b152a798303
Vinci, A. (2021, March 15). Bruciano un quadro di Banksy per rivenderlo online come NFT: incassano più del quadruplo. Corriere della Sera. https://www.corriere.it/tecnologia/21_marzo_15/bruciano-quadro-banksy-rivenderlo-online-come-nft-incassano-piu-quadruplo-280336f2-82be-11eb-8fd7-3fd81ad54bdb.shtml