On Beeple, Nyan Cat and the latest tech phenom: the non-fungible token, or NFT.
For those scratching their heads about the latest tech phenom called non-fungible tokens, or NFTs, I have one simple sentence to explain it all: Everything that can be digitized will be digitized.
It was the same explanation I gave as the internet first went commercial in the early 1990s, when I started writing about the nascent medium. I was often asked the same questions by people who often thought of it as a fad: What exactly was on the internet? And why would I use it?
Everything, I answered, to the first question. All knowledge. All communications. All entertainment. All movies. All commerce.
To the second question, well, my answer was usually: Whatever.
With NFTs, we’ve come yet another step closer to fully digitizing our lives. Like the internet, they are complex, but in the simplest terms, they are digital files that are stored using a technology called blockchain, which is essentially a digital ledger. But unlike cryptocurrencies, including the well-known Bitcoin, NFTs are not interchangeable with one another, because of their unique digital assets as well as important digital authentication that marks ownership.
The easiest analog comparison many make is to baseball cards, some of which are valuable and some not.
Anything that someone might find valuable that can be digitized can become an NFT — and be sold in any of the many crypto marketplaces. This includes video clips of sports events, tweets to photos and even things like rights to front-row seats at concerts.
NFTs have shown their utility most prominently recently in the art world, where people are paying enormous sums for the rights to “own” things, like a one-of-a-kind GIF of the famous Nyan Cat or a whimsical and often puerile collection of digital art images made by a popular graphic designer named Mike Winkelmann, who goes by Beeple.
When his “Everydays: The First 5000 Days” sold for close to $70 million in cryptocurrency to a crypto dude in an auction at Christie’s last week, NFTs decidedly went mainstream. Fans hailed the sale as proof that the sector would now climb to the heavens, and detractors speculated that this had to be some kind of digital Ponzi scheme that would soon collapse upon itself.
Neither is true. The point of the Christie’s sale was far more anodyne; perhaps the trend is more akin to the explosion of the very first websites. If you can believe it, there were only about 130 in mid-1993, such as the Trojan Room Coffee Machine (what it sounds like) and Bianca’s Smut Shack (what it sounds like), before sites like Yahoo and Google appeared.
It’s hard to imagine the web this way, but the immensely valuable Google is still just a website like all the others, except it managed to leverage the internet to build a business now worth close to $1.4 trillion.
Thus, much the way companies like Google brought more people online by making the web easier to use, NFTs could open a huge consumer gateway to cryptocurrency transactions, which have been largely limited to investors making speculative financial bets.
One of the big complaints about cryptocurrency is that you can own it and watch its value rise and fall, but most people can’t and don’t use it for transactions. NFTs offer the average person a real reason to finally use cryptocurrency.
And in what is a major improvement over the crypto market’s many middlemen, NFTs will accelerate the trend of allowing creators to have more direct relationships with their fans, as well as enable them to participate in the long-term value of their creations.
“It’s a blank slate” is how Beeple described NFTs to me in an interview, never mind that bizarre images of a naked Elon Musk and a lactating Donald Trump, which have driven art critics crazy, are how he has chosen to fill his.
And that’s pretty much all you need to know, since you can pour anything of value into an NFT — even assets linked to the real world like houses and cars — and it will be worth whatever it is worth, which has always been whatever someone is willing to pay to acquire it. Most important, it is verified and transparent.
It’s also the obvious next step as our world becomes ever more virtual. This irresistible trend has accelerated with great speed over the course of the pandemic, which has forced us to work online, play online, watch online, talk online, exercise online and learn online more than ever before.
And that behavior is simply not going to let up. So, repeat after me: Everything that can be digitized will be digitized. And it will happen before you know it.
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