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It wasn’t too long ago, four years maybe, I could walk up to anyone on the street or in a grocery store and ask them “Do you know what Cryptocurrencies are? Are you familiar with Bitcoin?” and I would receive blank and inquisitive stares as if I just walked off a Martian space craft. Fast-forward to today and almost everyone has at least heard the term cryptocurrency and usually has a basic idea of what Bitcoin is. There have been very few things to stir up such social disruption and create such a polarized opinion than that of the use of cryptocurrencies and how they fit into society today and in the future. I’m not here to debate the pro’s and con’s and regardless of what side of the fence you’re on: A passing enthusiast or a crypto day-trader, we can all agree that they have brought about a myriad of changes across multiple sectors such as finance, technology, security and art. Did I just say art? Yes I did!
Welcome to the world of NFTs
NFTs are the “next new thing” and are being bought and sold like hot cakes. I’ll be the first to admit that the art … well, we are not exactly talking the Mona Lisa here but that’s not what is important. What is novel about these things are the technologies that are going into making them and what that technology will be able to do for the physical world outside of the digital realm. NFTs are second generation crypto technologies built off the frameworks designed (or in many cases, still being designed) around multiple block chain technologies. Now, I don’t want to get too technical here so let me phrase this another way. The two pictures above (a CryptoDad and CryptoMom NFT I own) are currently worth a little over $4,000.00 based on the current market. If that doesn’t get your attention, a little Google time will show you plenty of these NFT’s selling for upward to millions of dollars and are not much different than what you see above: a simple piece of artwork. One set of NFT’s sold at Christie’s auction house for over $69 million dollars. As Bitcoin and other crypto has boomed in popularity over the last year, NFTs have also soared — growing to an estimated $338 million in 2020.
In the case of art work, be it a simple cartoon or a masterpiece of digital creation, what makes an NFT popular is the single fact of authenticity and rarity. Once an NFT is minted, it becomes another asset on the immutable block chain and cannot be reproduced ever again. Its cryptographic uniqueness becomes its own proof. Much like a certificate of authenticity provides provenance to a piece of art, the cryptographic nature of an NFT has its certificate of authenticity baked right into its creation at the time of minting. Unlike a certificate of authenticity made of paper, an NFT cannot be forged by any human means currently available now or in the foreseeable future.
What can I use this amazing new technology on?
For the most part, current generation NFT’s are of little real world use; however, the possibilities of their use are endless. Anything can be reflected as an asset token. Think land deeds, insurance claims, and software license ownership for example. Anything you currently require a third-party to “ensure proof of” or “authenticity” can be replaced with a non-fungible token, that ownership of and what it represents ownership of as a real world asset, with no deniability or possibility of forgery and without the trust and cost required of a third-party involved. NFTs have raised interesting philosophical questions about the nature of ownership. Wondering why when digital artifacts that can be endlessly copied and pasted have any value at all? Proponents would point out that most kinds of collecting isn’t based on inherent value. Old comic books were produced for pennies’ worth of ink and paper. Rare sneakers are often made out of the same materials as worthless ones. Some paintings hang in the Louvre, others end up in thrift shops. What makes them all valuable is the simple fact that people are interested and you can’t just go out and reproduce genuine versions at will anymore.
Examples currently attempting to find their way into an NFT status are:
- NBA virtual trading cards
- Music and video clips from EDM stars like Deadmau5
- A tweet by Dallas Mavericks owner and entrepreneur Mark Cuban
- Virtual real estate in a place called Decentraland
- Concert ticket ownership
More and more mainstream artists have also gotten involved in the space — especially from the world of music. In early March, Nashville band Kings of Leon announced their next album would arrive in the form of multiple NFTs. Depending on which a fan buys, various perks will be unlocked — like alternate cover art, limited-edition vinyl, and even a “golden ticket” to a VIP concert experience. No matter what your views are on crypto currencies and block chain technologies are, there are no doubts of the disruptive nature they will have over the next decade. It will be interesting indeed where the chips land on this!
