NFT : Definition
NFT is the acronym for “NON-FUNGIBLE TOKEN“.
Definition of fungible: is fungible what can be exchanged or substituted by something similar: we can exchange a 1€ coin for another 1€ coin, money is fungible, just like cryptocurrencies. So is non-fungible a good that cannot be exchanged by the same thing. By definition it is unique and unsubstitutable.An NFT is therefore a token (an asset) that is not fungible, it is unique and cannot be exchanged for a token of the same value.
Now that we have the raw definition of the NFT, let’s move on to the explanations, to clarify the phenomenon.
The NFT is not a cryptocurrency (we saw that it was non-fungible unlike crypto), but then what is it?
It is a certificate of authenticity, a title deed and a contract all in one.
Certificate of authenticity because when the artist creates the NFT from a work it generates a digital writing, an unforgeable marker of authenticity, incorporated and circulating in a blockchain (we will come back to this).
Title of ownership because the certificate of authenticity records, in addition to the creator, the owner of the work. At the creation it is the artist and then it will be the buyers of the work.
Contract because is incorporated in the NFT the clauses of use of the digital work as well as possible “royalties” perceived by the artist with each future transaction, if it decided so. This is what is called “smart contracts” or automated contracts.
This digitally generated set of contracts is recorded in a register, which itself is incorporated in a blockchain.
This article is not intended to go into the details of how a blockchain works, which is a vast technical subject in its own right!
What is the NFT revolution?
Before the NFT technology it was simply impossible to be the owner of a single digital file, whatever it is. Indeed, digital files are infinitely duplicable, a simple copy and paste of an image and I have on my computer the desired image.
But… I am not the owner, and even if I am, because I am the creator for example, nothing guarantees it in a secure and unforgeable way.
This is precisely what NFTs linked to blockchain technology allow today.
An NFT work is today authenticated and protected by the famous certificate we mentioned above.
The digital art revolution
It is unquestionably unprecedented, artistic works are sold to collectors, digital art enthusiasts and investors.
Just like classical art. Except that this time, everything happens on the Internet!
And above all, a social fact claimed by the NFT/geek community: the rejection of intermediaries in the art world. That is to say that the visibility of such or such work is no longer subject to the appreciation of art critics or experts of all kinds. It is the users, the Internet users themselves who decide, according to their tastes and their culture, what they wish to spend to acquire a work.
NFT rhymes with freedom
NFTs are part of the geek culture, offering more freedom to the buyers as I wrote above, thanks to the inexistence of intermediate decision makers. But also more freedom for the artists. Indeed, there is no intermediary, except for the NFT selling platforms, between the artist and the buyer. Nor between a buyer reselling a piece to another buyer. The artist creates his NFT from the work, puts it on sale on one of the existing sites, sets the price, promotes it on social networks or his personal site and then makes the transaction with the buyer, at a fixed price or at auction. The latter can even, and this is an incredible opportunity for the recognition and monetization of digital artists, decide to set a percentage that he will receive on each future transaction!
Headlines in NFT
In 2021, NFTs have been the talk of the town, which is quite normal since this is the year when this market takes off.
As an example, here are 3 big deals that made the headlines in the international media:
The work of digital artist Beeple, entitled “Everydays: The first 5000 Days”, was sold at auction for the modest sum of 69 million dollars. This has put this artist in the top 3 most expensive artists in the world during their lifetime.
The famous rainbow cat, Nyan Cat, was created by Chris Torres in 2011. He updated this Gif in 2021 and sold it for 300 Ether, or about $587,000 at the time of sale.
The NBA created a partnership to sell “highlights” in NFT, which are clips of a few seconds of NBA highlights. As part of this, an NFT clip of Lebron James was sold for $208,000.
Who are the NFT stakeholders?
Here are, below, the main interested parties and users of NFT, grouped in 3 categories:
Artists: it’s a new way to monetize their work, promote it and protect it. Moreover they have the possibility to choose to receive a percentage on each transaction made on their works! Automatic royalties in cryptocurrency.
Buyers: NFTs allow you to support the artists you like, directly, by choosing to pay to get their creations. As the owner you can also use it more or less as you wish, indeed to date the contract corresponds to a licensing right.
Collectors / speculators: the world of NFTs nowadays revolves a lot around speculation related to collections created by artists. We will talk about it again in a specific article, but it is simply a matter of buying works that have just been put up for sale, and in case of a good “drop”, reselling this same work at a (very) good price.
Where to look for and acquire NFT ?
Currently there are several important platforms where you can buy and sell NFTs, such as OpenSea, Rarible or Grimes’choice. There are many others as well. Note that it is necessary on these platforms to have a “crypto wallet”, a wallet of cryptomoney. Because the transactions are made only in crypto currency.