This is a good question. By definition it is a ‘Non Fungible Token’. So basically, a digitized piece of art. This form of artistic expression has taken the world by storm in 2021. What is it exactly and is this just another crypto fad?
Think of a Bitcoin, you can trade it for another type of cryptocurrency and you still have the same “value”. Yet, the NFT traded in for another NFT will not give you the same “item”. Think of a Picasso painting: if you trade in a Picasso for another Picasso painting, you will not get the exact same painting. Starting to make sense?
To get technical about it, the NFT has a unique and non-interchangeable unit of data stored in a place called a Distributed Ledger, that uses blockchain technology to establish proof of ownership.
Basically, you're paying for a file and proof that you own the original copy.
How does it work?
The NFTs are tokens, part of the Ethereum Blockchain.
To clarify, Ethereum is a cryptocurrency just like Bitcoin and Dogecoin. Ethereum’s blockchain supports NFTs. Instead of buying and selling “coins”, in the NFT market you buy and sell digital art.
It can be anything art related: music, drawings, photography, videos, tweets and so on. The whole idea is to bring ownership to the Internet, but it does get weird. You can actually download and save an art that has been sold for $200k, or $600k, but you can’t own the original. Let’s go back to the Picasso example: anyone can buy or own copies of it, but only one can own the original.
The point of NFTs depends on whether you are a Buyer, Collector or an Artist.
As a buyer, you are financially supporting artists and benefiting from some usage rights such as posting it online or using it as a profile picture.
As a Collector, NFTs work like stereotypical art, where you invest in something that (hopefully) will increase in value and you could resell it for a profit. Albeit, it sits on the Internet and you would need a special projector to project that art on your wall at home.
As an artist, it gives you a way to sell your art where there wasn’t a market before, and can allow you to still earn a percentage of the art you sold every time it changes hands. There is a smart contract embedded in the blockchain that makes sure the artist gets a percentage each time the piece of art is sold. This is revolutionary in the art world and for Intellectual Property rights in general whereby artists often times are cut out of future sales of their work.
To Recap
The longevity of NFTs might be challenging to predict, but the majority thinks they are here to stay, as digital art collecting is selling at very high prices and at a very quick pace. As a painter myself (when I am not lawyering and providing excellent customer service to you all) I think this technology will allow artists to a new base of customers around the world that can see, buy and enjoy the art online. The future is here everybody...