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Two out of six people don’t know what an NFT is. 8 out of 10 people would probably think the above stats are completely random – and they’d be right! — but the point remains.
Although they are no longer unfamiliar to many, the question that is the title of this article continues to be heard on four of the nine dinners with friends. (Ok, maybe we left random stats here.)
The first hurdle is the name: non-fungible tokens? ? ? ? ? ? ?
It doesn’t help that two-thirds of the words that make up the acronym NFT are infrequently used. (I swear this stat is no longer random).
Let’s deconstruct this term.
Not (no). Come on, this one is easy.
Alternative (substitutable). A thing is fungible when it is not unique. For example, a 5 euro note is fungible. If I have one, and swap the other, the value is exactly the same.
The Mona Lisa or the Twitter founder’s first tweet (sold as an NFT for nearly $3 million) are examples of irreplaceable things. They are unique and irreplaceable.
Tokens (well, I don’t think this translates well).
There are several definitions and discussions on this topic, so we’ll have to simplify or we wouldn’t leave here today. Historically, tokens were passwords. Or rather: a system for generating passwords (numeric codes), originally used to access electronic banking services. It has the peculiarity provided by the physical device, a pen that generates a random password every time it is used. In this way, users can guarantee the security of accessing their accounts.
Currently, we all use tokens in a simpler way. Our SIM PIN is a token, like those confirmation codes we receive via email when we forget our Instagram PIN and want to recover it.
As part of our conversation, the token has a slightly different meaning.
Let’s assume a token is a digital representation of a real commodity or asset. This asset can be physical, like an object, or even real estate, like a house, or digital, like a song or video.
For example, an object’s token is a digital confirmation of ownership of that object, and the value of that token depends on the value of the object it refers to.
Imagine that a Gucci bag has a QR code on the label, and by reading this QR code, we verify the authenticity of the bag. Now imagine that in addition to verifying that a suitcase is genuine, they can also verify who is the rightful owner of that suitcase.
This is more or less.
An essential feature of these tokens is that they are registered on the blockchain, which makes them public and immutable.
For simplicity, we assume that the blockchain is a series of transparent, high-security, linked vaults. Inside these vaults are transaction records. Once the operation record is in the vault, it cannot be changed.
Everyone can see what’s inside, but no one can change its contents.
Closing the dictionary title, we can conclude very broadly that an NFT is a digital property certificate with two peculiarities: everyone can see it, and no one can change it.
The following are examples of NFTs:
(one of 3350 strange whale Created by Benjamin Ahmed)
“Hey, this could have been done by my 12 year old grandson”
Well, contrary to the facts, there is no argument. The truth is that this series of NFTs was created by a 12-year-old British boy who sold for around £290,000 (about €350,000).
In this case, NFTs are more than just images. Yes, it is an image and comes with a digital certificate owned by the purchaser.
“Okay, I’ve figured out what an NFT is, but it doesn’t work!” (This sentence goes 5 times a day… go, sorry. I’ve stopped).
Last year, the market for NFTs grew by more than 18,000%. Of course, it also has some guesswork. But NFTs are giving artists around the world a new way to sell their art.
Mike Winkelmann is an artist named Beeple. Until early last year, Beeple had never sold a print (one of his digital creations) for more than $100.
In March, he sold the NFT at an auction for $69 million, making it the most expensive NFT to date.
(Everydays: Beeple’s first 5000 days)
In addition to the art market, NFTs are also making waves in many fields such as sports, music, fashion, and games.
In Portugal, even Santa Casa da Misericórdia has launched an NFT marketplace.
Strange to some, inevitable to others, the reality is that NFTs are making progress and it’s not impossible that they will soon be used to prove the identity of almost anything. A car, a watch, a book or even a pair of sneakers.
Let’s wait and see!
Pedro Líbano Monteiro, 27, is the founder of companies such as Musicasa, Fyre Agency and Importrust. Joined Global Shapers in 2018.
The Observer joins the World Economic Forum’s community “Global Shapers Lisbon” for a weekly discussion on a relevant topic of national politics as seen through the eyes of one of these young leaders of Portuguese society. Accordingly, this article represents the author’s personal, though non-binding, views within the values of the global shaper community.