You’ve no doubt heard of NFTs lately, with digital works that have sold for astronomical amounts. But what exactly is an NFT, and how is it that they can reach such sums?
This article is part of the file “Cryptocurrencies, the big folder”
What is an NFT?
NFT is the acronym in English for Non Fongible Token, or in French a non-fungible token. As a reminder, a fungible good is a good which belongs to a whole, but which does not have its own identity. A bitcoin, for example, is a fungible good, because nothing distinguishes one bitcoin from another, and one bitcoin has the same value as another. In contrast, an NFT is a unique good, whose uniqueness is authenticated by the blockchain . The ERC-721 standard is the first standard that allowed the representation of these NFTs.
This uniqueness makes one token different from another. And therefore it can only be possessed by one person. This means that NFTs can be considered in the same way as a work of art. In the same way that only one person can own a particular painting, a work in digital format as an NFT will have the same rarity. And it will be even easier to prove its authenticity because it is the blockchain , therefore a public register and for the moment unfalsifiable, which will act as a certificate of authenticity.
Indeed, an NFT is like any other token stored on a blockchain (most NFTs are on the Ethereum blockchain). You can also find the history of all the transactions associated with this token. And as for accessing your bitcoins, for example, it is your private key (stored online, on your disk or ideally on a cold wallet type ledger) that will authenticate you as the owner.
NFTs and art
This allows us to better understand the fact that NFTs can see their value soar. We can cite for example this work which sold for 6.6 million dollars. Or the first tweet in history that sold for $2.9 million. Because as in the art market, if a listed artist offers an NFT, this may generate interest. There is also a speculative effect. It’s a very young market, so many people probably think that by positioning themselves early they will be profitable.
There may even be crossovers between “physical” art and art via NFTs. We can cite in particular the article Pascal Boyart , alias PBOY. He comes from street art, and was interested in cryptocurrencies very early on. First by allowing donations with a QR code on his works. Then by offering via one of his works to win $1000 in Bitcoin by solving the enigma hidden in the fresco. He naturally turned to NFTs, notably via his last great physical work ( Underground Sistine Chapel ) of which you can buy portions in NFT.
It is not only in the art market that NFTs find their place. NFTs can be found in other areas:
- NFTs to play and/or collect, such as cryptokitties which were largely responsible for the congestion of the Ethereum network towards the end of 2017. We can also mention the startup Sorare, a fantasy football game which has just made a record fundraising of 680 million. The idea is to collect cards of more or less rare footballers, and to use these cards to play matches. Or finally the game Gods Unchained .
- metaverses, fictitious virtual spaces. We can cite the best-known example, decentraland . In this case, NFTs make it possible to buy plots of land. There is a lot of talk about metaverses lately because the GAFAM have gotten into the game . Metaverses are seen as potentially the future of the internet.
- utilities. For example it is possible to buy a domain name, which will be uncensorable, via unstoppable domains .
If you want to know the different platforms that allow you to buy or offer NFTs (OpenSea, Rarible, SuperRare…), I recommend this fairly comprehensive article on the matter .
To learn more, here are some videos.
A general presentation video by Hasheur:
A video quickly showing you how to buy, sell or create an NFT:
Another video on the different possible ways to buy an NFT: