NFT’s have become a trending news story, leaving many of us wondering what the heck is an “NFT” is? So before we go any further, let’s find out what NFT’s are and why they are making the headlines!
The Definition of an NFT
An NFT stands for a Non-fungible token… no not a form of mushroom (fungi) but rather a unique good or commodity whose individual units cannot be replaced with something else. As an example, a Bitcoin is fungible, you can trade one Bitcoin for another and you will have the same thing. When it comes to NFT’s this is not the case.
A unique piece of art is non-fungible. If you trade it for a different piece of art, you will have something completely different but that’s not all. From a very high-level perspective, NFT’s are usually part of the Ethereum blockchain, which is the second-largest cryptocurrency next to Bitcoin that is used in blockchain. What that means is that as a result of the blockchain component, NFT’s can store additional information which makes them different from an ETH coin. So why an NFT?
What Makes an NFT an NFT?
NFT’s are digital goods. They can be a painting, music, videos, sketches, drawings and more. They are essentially digital products that can be downloaded and are housed on a blockchain. Their ownership is maintained on the blockchain.
Today’s NFT’s are making the news in the digital art forum. Recently, a compilation of Artworks by Beeple called “Everydays – The First 5000 Days” sold for a record $US 69 Million. The sale was recorded on the blockchain and sold through Christie’s auction house. Before this massive sale, the artist behind Beeple, Mike Winklemann, a digital artist had sold his prints for $US 100. In 2020, Mr Winklemann sold his first NFT piece for roughly $US 66,666.66. In December of 2020, he sold a series of works for $US 3.5 Million. For this artist who has a massive following, NFT’s have made him a wealthy man!
For purchaser’s of NFT’s, they obtain the digital rights to their purchase and depending on the artist, some conditions as to what they can and cannot do with the end product. Notably, NFTs cannot be copied. The artist can still retain the copyright and reproduction rights if they decide to do so. In the case of the purchaser of the $US 66,666.66 series of Beeple, the buyer was able to resell their rights for $US 6.6million. Christie’s, the seller of the record Beeple NFT has in a sense legitimized the world of NFT’s with their record sale and suggests it will work with other artists in the future in the NFT art world.
So when all is said and done, what’s the point of an NFT. As an artist, NFT’s allow you to sell your art in a market that was otherwise not available. People have become familiar with digital art and see the opportunity to collect it. NFT’s also keep giving. There is a feature that can be included in the sale that will provide the original artist with a percentage of funds every time the NFT is sold. A successful and publicized sale like the Beeple NFT can also take an artist to the next level!
Buyers of NFT’s also benefit. Firstly, they can support an artist that they enjoy and purchase some art that eventually could make them some money. Purchasing an NFT also gives you the use of that image. Most importantly, it gives you some coolness and bragging rights to owning an NFT that is blockchain registered. How cool is that?
An NFT can also be considered to be an asset like regular art. As an art collector, you hope that your purchase will appreciate in value. The same goes for an NFT. If Beeple is a great example, it’s time for everyone to get into the NFT game!
As mentioned previously, NFTs can vary in terms of their medium. Recently videos have been sold as NFTs and technically anything digital can be sold in the same fashion. What is important to remember is that every NFT is considered a unique token on the blockchain. While there could be a Beeple, there is only one absolute actual version, where there are several numbered copies of the same artwork.
Where Can I Purchase an NFT?
Why are people purchasing NFTs? The answer is interesting. Many feel that this is the future when it comes to fine art collecting. Some people purchase them for the fun of it hoping they make some money. Others just think it’s cool and want to be part of the trend. Today several marketplaces have surfaced that allow people to buy and sell NFTs. These include Rarible, OpenSea, Nifty Gateway and others.
Can Thomas Crown Steal an NFT?
The answer is maybe. They would have to deal with the Ethereum blockchain. Cryptocurrencies have been stolen in the past but the benefit of the blockchain and NFT’s is that each transaction is recorded making it difficult to steal and resell. For now, we can all live vicariously through Beeple!