Despite the recent crypto slump, it’s been a boom time for blockchain technologies. There have been a number of high-profile NFT sales – including a picture of Nyan Cat going for millions, musicians selling a collection of digital artwork and the NFT version of the first tweet selling for $2.5 million. And just this week, a Christie’s auction of digital art by the artist Beeple sold for a record $69 million.
The hype has prompted many newcomers to ask, what exactly is an NFT? NFT stands for non-fungible token and it’s a kind of digital ownership certificate. Unlike most digital files that can be infinitely reproduced, NFTs are one-of-a-kind and unique to the buyer. They can be bought and sold with cryptocurrencies or dollars and the transaction is recorded on the blockchain, which means it cannot be faked.
NFTs are created on Ethereum’s blockchain and the records they store can be verified by thousands of computers around the world. This makes them incredibly secure. They are also indestructible and, unlike the digital files they link to, can never be deleted or altered. For gamers and collectors, this is the big selling point. It allows them to possess digital objects in a way that they can’t with music purchased from iTunes or other download services.
But the bigger impact could be in the creation of new forms of artistic and intellectual property. NFTs allow artists and other content creators to monetize their work by creating virtual items that can be traded. And the ability to create and sell scarce, digital goods has implications far beyond the world of cryptocurrency.
In addition to NFTs, there are other blockchain-based projects that are trying to bring digital goods to the real world. Projects like the Etherium Network are working on a system that will allow people to purchase and redeem virtual goods at brick-and-mortar stores.
But there are questions about whether these projects will be successful in the long run. They may solve some problems, but they also raise a host of other issues that have yet to be fully worked through.
NFTs could be the future of intellectual property, but it’s a bit early to call them a success just yet. While they make it easier to trade digital goods, they still don’t address the issue of who owns what, which is a fundamental question that needs to be solved before we can have a thriving market for NFTs.
There are plenty of other ways that blockchain technology can improve our lives, from streamlining medical records to allowing us to buy and trade digital versions of physical goods. But the most important thing to remember about NFTs is that they don’t necessarily replace older forms of artistic and intellectual property like paintings or sculptures, they just add another layer to how we create and value them. And that’s a good thing, even if it is a little weird. nfts