NFT, or non-fungible token, has become the “blockchain” of 2021, a word that I had never heard of and that is suddenly everywhere. Whether it's Twitter CEO Jack Dorsey selling his first tweet, or the Kings of Leon selling their latest album, as one, NFTs are everywhere. But what is an NFT?
Some see it as the latest fad, a new crypto bubble that will eventually burst, while others believe that NFTs could play an important role in the future of digital art.
We can't say for sure what it will be yet, but read on to find out everything you need to know about NFTs and our roundup of why they're worth seeing.
The classic Nyan Cat gif was sold as NFT (Image credit: Chris Torres)
What is an NFT?
As we mentioned, “NFT” stands for non-fungible token, but what does that mean?
If something is fungible, it means that it is not unique, it is a commodity. Dollar bills are fungible, two bills of the same value are equal for all purposes. Apples are expendable, your cereal box is expendable, your PS5 is expendable.
However, if your PS5 was turned into a work of art by drawing it or adding decoration, as you may have seen online, then it has become non-expendable.
Just wanted to say thanks for the outpouring of love and support for my PS5 TLOU across all media channels 🖤 #TheLastofUsPartII #thelastofus #naughtydog #playstation #ps5 #PlayStation5 @Neil_Druckmann @Naughty_Dog @PlayStationUK pic.twitter.com/wkbLUtjp0, 2021
Think of the Mona Lisa. You could take a picture of it and hang it on your wall, but it would not be the same, nor would it have the same value, as the Mona Lisa that resides in the Louvre. Like other original paintings, the Mona Lisa is not expendable as it is one of a kind.
A non-fungible token is a digital interpretation of this. Someone else may have a copy of the same digital artwork, but it is not the original file.
So are NFTs unnecessary?
It is certainly a strange idea to understand. When something is digital, the original file and a copy are apparently the same. For some people, there is a "quirk" about this original file that makes it unique.
While it may seem like these people are imposing an imaginary value on you, it's not that different from the Mona Lisa example in many ways. Basically, the Mona Lisa painting and a copy are of the same image; it's just that people have imposed qualities on the original that make it valuable.
With NFTs, it's the same idea. But while you may not be convinced of them yet, there may be more tangible benefits to owning NFT down the road.
Kings of Leon sold their latest album as NFT (Image credit: Kings of Leon / Matthew Followill)
What is the future of NFTs?
Here things get complicated. Some see NFTs as the latest fad that, like the “GameStonks” bubble, will eventually burst, leaving plenty of winners and losers in its wake. However, some interesting ideas could mean that NFTs survive.
An example could see content creators rewarding their biggest fans based on NFT ownership. Potential creators could host a feed or question and answer session in which only the owners of certain NFTs, or several of the creator's NFTs, can participate.
You may see people selling their NFT collection if they decide to give up on a certain artist. Think of it as a digital version of selling old albums - the seller gets their investment back and a new fan can catch up on all of the above.
With reselling, NFT creators also have the option of stipulating that if an NFT is resold, they get a discount. It is common for art to gain in value over time, giving artists the opportunity to benefit from this increase in value.
None of this guarantees that NFTs aren't a fad just yet, but they do leave a variety of exciting possibilities open, which means they're definitely worth checking out.
