Non-Fungible Tokens, or NFT’s for short, have been floating around the news and social media for the past few years, but only in the past year have they really taken the world by storm. They first arrived in 2015 and have since gained popularity all over the globe.
An NFT is a piece of data covered under the term of a blockchain, and is mostly part of the Ethereum blockchain family, a cryptocurrency similar to that of Bitcoin. The digital tokens include certificates of ownership for the virtual assets that are bought and sold and are tracked on their underlying blockchains and provide the buyers proof of ownership. They can also constrain smart contracts, whereby the artist of the content bought, will receive a cut of any future sale of the token. The record that demonstrates who has owned the artwork is stored in the Blockchain.
They are mainly used to commodify digital creations, such as artwork, video game items, audio documents and music files, and have been described as the new evolution of fine art collecting, and the digital answer to collectable merchandise.
What does Non Fungible Token mean?
‘Non-Fungible’ means that the tokens cannot be replaced or traded with another token, as no two NFT’s are identical. It also means that they each have unique properties that prevent the possibility of being exchanged or traded. Other cryptocurrencies like Bitcoin, however, are fungible assets, meaning that they can be traded for the same value with units that can be readily interchanged.
NFT’s create scarcity and rarity among otherwise infinitely available products, as confirmed by the individual authentication certificates that are included within NFTs. The one-of-a-kind, verifiable assets can be bought and sold like any other piece of property. The selling and purchasing takes place via an online marketplace or auction site. With the most common NFT marketplaces being OpenSea, Mintable, Nifty Gateway and Rarible.
Previous examples of existing NFT’s
- ‘Cryptokitties’ were one of the original NFTs created and existed as a virtual trading game on the cryptocurrency platform of Ethereum. They allowed people to buy and sell virtual cats with unique and individual blockchain technology.
- A gif (a short, repeating highlight reel) of the Nyan Cat 2011 video has been sold as an NFT for more than $500,000.
- Musician Grimes has sold pieces of her digital artwork for more than $6,000,000 as NFTs.
- Twitter Co-Founder, Jack Dorsey’s first tweet on his social media platform has been the first NFT tweet to be sold, with the bids reaching over $2,000,000.
- Virtual artwork by digital artist Beeple, has been sold for $69,000,000 as an NFT, introducing a new record for digital artwork sales.
- The NBA have introduced their own version on NFT’s, titled ‘Top Shots’, where basketball fans have the opportunity to purchase video highlight reels of their favourite player’s historic moments. An NFT of Lebron James’ famous dunk for the Los Angeles Lakers reached over $200,000.
- One Direction’s Louis Tomlinson has also made suggestions he may be looking to release future music files as NFT’s.
- American Rock Band, Kings of Leon, plan to release their next album as an NFT to their fans.
- Toronto-based artist, Krista Kim, has sold the first ever digital home via NFT for over $500,000, as the route for virtual design continues to develop in the digital world.
By Elysia Shirley. Elysia is a First-year Law student at Solent University in Southampton. Currently training to become an accredited Citizen’s Advice, Vulnerable Witness Service Volunteer, writing both legally informative articles, and legal news articles for Lawdit Solicitors, Southampton, she is the Deputy Events Manager within her University’s Law Society and the Faculty Representative within The Solent Law School.
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