NFTs have caught the world’s attention when a price of a collage of images by digital artist Beeple was reached $69.3 million. Not only that, Jack Dorsey’s first tweet sold for US $2.9 million, a video clip of a LeBron James slam dunk sold for over $0.2 million and a decade-old “Nyan Cat” GIF went for $0.6 million.
Non-fungible token, or NFT, is the latest cryptocurrency phenomenon to go mainstream. An NFT is a certificate of ownership and authentication for any digital asset traded on the blockchain, the digital database underpinning cryptocurrencies such as bitcoin and ethereum. However, each NFT has a unique digital signature that makes it impossible for NFTs to be exchanged for or equal to one another. Anything virtual can be traded as an NFT: art work, images of physical objects, music, sports clips, tickets, and even virtual real estate. In other words, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain.
Although that may be far from simple for the uninitiated to understand, the payoff has been huge for many artists, musicians, influencers and the like, with investors spending top dollar to own NFT versions of digital images.
“Some of that interest is from people who enjoy supporting the work of independent creators by purchasing their works,” Artsy CEO Mike Steib told CNN Business. “Others are intrigued by the idea of taking a digital asset that anyone can copy and claiming ownership of it. The recent headline price records for NFTs seem to have been largely driven by newly minted crypto millionaires and billionaires looking to diversify their bitcoin holdings and more interest to the crypto ecosystem.”
Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures, said that “essentially, NFTs create digital scarcity.” According to Yu, “NFTs are risky because their future is uncertain, and we don’t yet have a lot of history to judge their performance.”