The Rise of NFTs


For the past few months there has been a surge of interest in the tech world revolving around the concept of an NFT, or “non-fungible token,” and as of late that interest has been leaking into the mainstream media and culture, with big artists now minting and selling their own music and art as NFTs for insane amounts of money, the most infamous being the work of artist Beeple, who sold a collection of digital art for $69 million. But a lot of people still don’t seem to understand what an NFT is, and the change in art and culture it can bring.

To understand an NFT, it’s important to understand the blockchain. Within the technological revolution, we have seen three key events take place that have transformed how we use and interact with technology, with the last event still currently taking place.

First, we had the internet revolution, something that seems so long ago and yet plays such an integral role in our lives. The second big event was the mobile revolution, which brought about a radical change in our personal convenience and how we communicated with others. The third revolution is still taking place, and that is the blockchain.

The blockchain can appear difficult to grasp, but it is essentially this: It is a decentralized system of recording and processing information that is virtually impossible to hack or cheat. Any transaction that is made on the blockchain is instantly recorded and cannot be duplicated, like a digital ledger. Information on the blockchain is not stored in one area, rather it is copied or updated onto each computer (known as nodes) on the network, so if someone wanted to hack the blockchain, they would have to hack every single computer.

What’s great about the blockchain is that it is anonymous, immutable, secure, powerful, and unanimous. The most important benefit though is that it removes any need for a third party validation or medium. It is essentially borderless, meaning someone in America could directly trade with someone in Singapore, without needing to go through a bank, or investors, or lawyers, or a marketplace.

Perhaps the most famous example of the benefits of blockchain is this new wave of cryptocurrencies such as Bitcoin or Ethereum. These currencies are powered by blockchain, and can be traded peer to peer through mobile and instantly, without the process of banking fees and with full anonymity. Many have gone as far to say this technology has the ability to “give power back to the people.”

Going back to NFTs, these tokens are built off of the Ethereum blockchain. Each token is minted with a unique digital code, which essentially makes the art piece valuable and original. This is generally the most confusing part of the process as well, because anyone could still copy or save a picture on their phone for free, just like saving an image you found online.

The difference between your copy of the image and the image uploaded as an NFT is that the image uploaded as an NFT has that singular, unique code. To give an analogy, it’s like physical art collections. One could easily get a fake Picasso that looks identical to the original, but it won’t be worth any value because it isn’t the original – you own the fake Picasso, not a real Picasso.

Once you’re able to grasp the concept of NFT’s, it’s clear to understand the massive hype around them. They give a platform for smaller or more experimental artists (especially minorities) to showcase their work and amass a following, and it allows buyers to gain capital through collecting and reselling.

However, there are some downsides. Firstly, the amount of energy that goes into minting an NFT isn’t sustainable, and many have been raising ethical concerns on the impact this process could have on the environment. Secondly, most of the NFT’s that are currently popular seem kind of ridiculous and nonsensical. Many have taken advantage of this new craze, and are uploading random or pointless videos and images for insane prices. For example, Jack Dorsey – founder of Twitter – recently sold a screenshot of his first ever tweet for almost $3 million. When realizing the absurdity of the whole thing, it’s fair to see why many people aren’t as enthusiastic about NFT’s.

However, this trend of zero-effort art with insane prices is soon to die out, as within a few months, anything that can be an NFT, will be an NFT, which will allow for the market to calm down and decide what’s worth anything and what isn’t.