What is an NFT – the ‘new bitcoin for art’?
Grimes sold 10 images of digital artwork, the most expensive for nearly $400,000, to someone who wanted ownership of the online goods. Its not a marketing trend – it is genuine artwork.
These artworks are called NFTs, or “non-fungible tokens”, and they exist on a similar blockchain technology to bitcoin as a way to prove “ownership” of them.
Or is it just a marketing trend?
The idea has exploded into popularity recently based on the rise of cryptocurrency technologies, and the desire for digital artists to have greater ownership – and monetisation options – over their craft.
A non-fungible token (NFT) means a digital item that belongs to the person that purchased it. In economics, fungibility is the property of a good being interchangeable, or replicable. For example, if you shared a photo from your phone to another person over a text message, the data and image would be replicated.
The NFT does not stop that replication – you could still take a screenshot of a digital artwork or share a Nyan Cat GIF – but it does show who ‘owns’ an original image.
While NTFs exist on a blockchain, like the cryptocurrencies used to buy them, there are a number of other differences: NFTs are indestructible on the blockchain, cannot be divided, and can always be traced back to the original creator.
Some examples of NFT:
The CryptoKitties game, where players traded digital kittens on the Ethereum blockchain, was very popular in 2017. Different cats – or images of cats – had different characteristics and users swapped them to collect varieties of different digital animal.
For some artists, NFTs are a way to make money from digital art. Royalties can be built into the artwork directly, so that each time the artwork is sold the creator receives a cut. It’s much more than a marketing trend. For potential meme dealers who want to make money out of the images they create, this can be an attractive prospect.
“It gives power to the creator,” Chris Torres, the creator of Nyan Cat, has said. “The creator originally owns it, and then they can sell it and directly monetize and have recognition for their work.”
Depending on how easy, or difficult, it is to create artwork, it can also be a fast way for celebrities to make money. Grimes sold $6 million worth of digital artworks in under 20 minutes.
These artworks have such a high value for the same reason physical art has a high value – the scarce nature of NFTs, and the thick wallets of people with enough cryptocurrency to purchase them.
The volatility of the market, where NFTs can surge and drop vary rapidly, means that only people with enough disposable income to be protected from a bad investment. This, once again, puts it in favour of the rich. Maybe its just a marketing trend but who knows!
This last sold for $3,600, but the current owner is asking for $16,300. GIF by Trevor Andrew