NFT : Big Deal or Bubble?
Shruti Bahl /
You probably have heard the term NFT, Non-Fungible Tokens thrown around loosely a lot these days. But what does it mean exactly and as a designer why should you really care?
In (not so) simple words, NFT, or Non-Fungible Token, is a unit of data stored on blockchain that contains a unique digital file, which could be anything like images, audio, video, games, memes, tweets, art etc.
Fungible vs Non-Fungible
As attractive as NFT sounds, it’s important to understand the difference between Fungible and Non-Fungible. Fungibility basically means interchangeable. For example, a Rs. 100 bill is fungible because two separate Rs. 100 bill hold the exact same value, for all intents and purposes.
On the other hand, non-fungibility means non interchangeable. For example, two Jordan fleer rookie cards may almost look identical, yet they are not the same. Distinguishing factors like centering, coloring, sharpness of corners would tell them apart.
How do NFTs really work?
An NFT is one of a kind, a unique asset that one can hold just like one of a kind rookie card. It all starts with a piece of content, could be an original or something already in existence, like the viral Doggface208 Tik-Tok. Once created, that piece of content is minted on blockchain, which means turned into an NFT. It will then reside in your digital wallet. Technically, nothing is stopping anyone from downloading or replicating your NFT from the internet, which we do all the time like dragging and dropping memes/gifs etc. BUT the blockchain confirms the originality and authenticity via digital signature on NFT. Apple to apple comparison would be of Mona Lisa, One and only one Mona Lisa exists only at the Louvre. Your one and only one NFT exists on the blockchain.
In technicality, on the blockchain, an NFT can be accessed using the wallet. This digital wallet is a bunch of lines of code that decrypts the seed phrase to access the account. This account is then listed as the owner of the NFT within NFT contract and this contract lives on Ethereum.
Next, you can choose from the list of popular NFT marketplaces to place your NFT up for sale. Some of the famous ones are, Nifty Gateway, OpenSea, Rarible and Makersplace. Also, you can buy or collect NFTs that you like or consider valuable.
How do NFTs work for digital creators?
Traditionally, in the physical world, once the art piece is sold, the artist no longer receives any revenue from its future sales. However, if you sell a digital piece of art, you continue to make money even after the first transaction, you get a cut from every future sale of that NFT. In short, NFTs allow digital artists to create unique art pieces that can be tracked down easily using blockchain. Also, you can create value and scarcity for your creations.
The race to create NFTs is real…
Industries ranging from fashion, real estate, sports to games, everyone is raging about it! Of course, everyone has a lot of questions like who is the audience? Is there really any utility in buying NFTs? Whether it’s another cryptocurrency fad that might eventually become irrelevant?
It’s okay to wonder that why NFTs are such a big deal! In my opinion, the value of NFTs come from social currency, utility and unique access.
If you are someone who had membership cards, reward on credit cards, access to VIP events, you know what really an NFT is! How many of you remember Farmville game? On a micro level, it was a very silly game where people kept planting virtual crops. In reality, a lot of people actually spent real dollars to buy virtual sheep. Ludo is a newfound love by everyone in my family post COVID. Not a single day passes by, when they don’t open the app to just collect the points and brag about it to other family members! It amazes me beyond imagination.
The reason people are buying NFTs is the same reason why people wear designer clothes with brand logo, drive luxury cars or hang classic arts on their wall. It’s the same reason people care about blue checks on Instagram and WhatsApp. Few years down the line, we will all have an NFT account just like a social media account. We will be stalking each other’s NFT purchases and bragging amongst our circle of friends. Anything and everything that exists digitally, can be an NFT. Currently, much of buzz is coming from digital artwork but also a lot of other things like – Twitter CEO, Jack Dorsey’s one liner tweet got sold for $2.9 million, LeBron James NBA clip was recently sold for $200,000.
Dogecoin isn’t an NFT. But this GIF of a dogecoin is. GIF: NyanCat on Coindesk
Are NFTs a fad?
NFT is definitely going to bring in a major cultural change and history teaches us that with change comes a lot of unacceptance and confusion. I feel in a long term, this might have larger implications. In 90’s, who would have thought of concept of online dating or riding in car with strangers (Uber and Ola), every idea is crazy until it’s not! I think it’s time to switch our mind to accept where the world is headed. NFTs are basically creating values around digital assets that could otherwise be shared infinite number of times on internet.
Is all this a bubble?
NFTs are right now in the same place where world wide web was in 1991. It is fair to say, now people are obsessed with it and it’s endless capabilities.
The same way that social media and influencer space turned into personalities & experts, NFTs will open doors for digital art industry or people with artistic inclinations to explore paths they never saw coming or thought possible.
Also, it is likely to cause a major shift in patent ownership. NFTs can potentially help creators get royalties from resale of digital work, and will empower them in ways they haven’t seen before. It will also likely lead to a shift in which art is perceived.
Welcome to the world of NFTs! I am not here to persuade you to make NFT purchases, I am just an observer of human behavior who is super excited to see where this takes us.
- Image credit : Beeple/Christies