You’ve likely heard them talked about as the next new thing in art collecting and investment. But the acronym gives nothing away.
NFT.
Sounds…meaningless. So, you decide to unpack it, roll it out and get the full name. That’s got to be better, right?
Non-fungible token.
Well…that didn’t help.
A token, like the kind you get at a carnival? Put in an NYC subway? And what is fungible? Fungus? I thought we were talking about art and technology, not mushrooms!
Down the Rabbit Hole
Please, don’t follow me down this hole. I’ve spent hours learning about this, talked to experts in the field of blockchain technology, art collectors and crypto…other people.
Still here?
Alright. I’ll try my best to answer any questions you have. But I warned you.
Let’s begin.
What is an NFT?
A non-fungible token.
You already said that.
Yeah. Right. Sorry about that. Okay, something that is “non-fungible” means it cannot be replaced. It's one-of-a-kind. A ten dollar bill is fungible; you can replace it with another ten dollar bill. It is the exact same as the bill you had before, and more can be made—no more, no less. But if you had a 1979 O-Pee-Chee #18 Wayne Gretzky hockey card, the most expensive hockey card ever sold, that’s non-fungible. It is unique because you can’t exchange it for a different hockey card, even another hockey card that is the same. Maybe yours is in better condition or has a bent corner. That changes the value and makes it one-of-a-kind.
Okay, so NFTs are unique. But what can actually BE an NFT?
Well…sort of anything. So long as you can digitize it. An NFT can be a song, a video, the collected works of William Shakespeare, this article, you name it. So long as you can make it a digital file, it could potentially be an NFT. However, the hype over the last few years has been on art.
So…the “art” my kid did on some program on my computer? That could be an NFT?
Sure. Why not? But you have to find a buyer or buyers that see the same value you do in it. I’m sure your kid can paint an amazing…dog? Cat?...Blob?...Sunset! You’re sure? Wow…
But just because something unique exists in a digital form doesn’t mean someone else wants it. That’s why the buzz around NFTs has been mainly within the domain of fine art collecting.
So no one’s going to buy my amazing Tweet that has three retweets.
Well, Jack Dorsey, the founder of Twitter, did sell one for just under $3 million USD. So…
Are you serious?! I thought I was being facetious!
Yeah, I know, right? And that’s not even in the top 10 of most expensive NFTs! A digital artist named Pak currently holds the record for the most expensive NFT ever sold. They got a whopping $91.8 million for The Merge on December 6th, 2021. They took their artwork, broke it into 312,686 pieces, which were then bought by 28,983 buyers. That means, in order to own the entire singular piece of artwork, buyers will have to negotiate with other collectors for their unique piece.