A mysterious acronym: NFT. And an equally vague name: Non Fungible Token. Behind this new concept, what is there really? There is a lot of talk about NFT, often to mock them or make fun of those who buy them at high prices. Understanding exactly what and what lies behind these three letters is not that simple. Because you must have already assimilated other complex concepts – the blockchain, cryptocurrencies, the metaverse and the Web3 – before approaching NFTs.
Short summary: blockchain it is a kind of totally decentralized database, shared by all its users. It is a technology for storing and transmitting information in a traceable but also anonymous way (at least under a pseudonym). Cryptocurrencies are virtual currencies based on the blockchain and an encrypted computer protocol. the metaverse it’s a virtual world where everyone presents themselves as an avatar. the Web3 it is the new Internet, which encompasses all these concepts and should progressively replace the centralized network dominated by Gafam (Google, Amazon, Facebook, etc.) as we know it today.
1. What is the definition of NFT?
NFTs are non-fungible tokens, which are unique virtual tokens. Data units stored on the blockchain. It is a sort of certificate of authenticity of a unique and non-interchangeable digital asset. In practice, money is “fungible” because you can exchange one euro for another without changing anything. It can also be divided differently (1 euro, 5 euro, 10 euro) and the offer is almost unlimited.
A non-fungible token is an unprecedented asset. This is the case of a work of art but also proof of possession of a house (its shape, its location, etc. are unique) or of a collector’s card. Sure, we can reproduce a painting but the original will always have more value. Hence, stored in the blockchain, the NFT also acts as a certificate of authenticity thanks to the encryption of the system. It cannot be changed or, in theory, stolen. At least as long as you don’t provide personal information, such as the access code to your virtual wallet, the Wallet, in which your NFT is stored.
2. What is the interest of NFT?
In concrete terms, we move from a world where the creator of unique content – a digital work for example – publishes his work somewhere on the Internet. This can be reused (copied) without her knowledge without her being in control and the work itself will be extremely difficult to monetize. With NFTs, the person will be able to issue an original work and benefit from it for life. Whatever happens, she will remain the author forever.
For example, he will sell it for the first time (with his certificate of authenticity which will follow the work throughout his life). If it is ever subsequently resold, the author or creator of the work may receive a small commission on the new transaction. Whatever happens over time, this person will always be considered the source of the job and will continue to benefit from it through resale. And he can manage copyrights and copyrights at his convenience. This is why owning a pair of Nikes in NFT doesn’t give you the right to freely use his image.
3. Are NFTs only about art?
Absolutely no. They’ve been reduced to that of the buzz effect, but it can be about anything unique. It can be anything digital: a drawing, a music, the original script of a film, a tweet, a fashion item to dress up your avatar in the metaverse … or even “figital” goods, or a digital duplicate of something that exists in real life. For example, the purchase of a collector’s watch or a designer bag, which is also virtually reproduced.
This can be used as an accessory in a metaverse but also more simply as a sort of identity card forever. In this NFT, the date and place of creation, the origin of the components (traceability), the carbon footprint, the name of the worker who manufactured the asset, etc. would be stored. To this can then be added data on the life of the product (date of repair, type of intervention, etc.). The same goes for owning an apartment. Rather than having authenticated documents, one can imagine an NFT that stores all proof of ownership and transaction data.
4. How do I create NFTs (and who can do it)?
Anyone can create an NFT. The simplest way is of course to create a unique work of art. Once the digital file is created, you need to choose the blockchain you prefer. Most of the time, Ethereum wins. You will then need to create a Crypto Wallet in order to recover the money from the sale of your NFT. There are thousands of them (MetaMask, ZenGo, eToro, Coinbase, Binance …).
Third step: register on a market. It is a portal where NFTs are sold. The best known platform is OpenSea but there are many others (Rarible, Mintable, Nifty Gateway, etc.). These digital art galleries sell your works in exchange for cryptocurrencies. Once you have created your account, you need to fill in your NFT information and electronically sign the documents and authorizations to sell. After this step, your NFT is available on your Wallet. It will disappear only once the sale has been made and the agreed sum has been transferred.
5. What are NFTs for?
In addition to art, NFTs are interesting in many other areas. We mentioned the certificate of ownership of a property or even a luxury watch. This also applies to tickets for a concert or sports match, video games (not owned by the game itself, but items in this game) or even collectibles.
But beware, an NFT can be misleading. According to an analyst who has thoroughly investigated the OpenSea market, around 80% of NFTs registered on this platform are plagiarized works of art, fake collections or spam. So be careful if you dream of becoming an NFT collector or watching this market (90% of NFT buyers do so in hopes of getting rich). Take a close look at who this NFT is selling and if they really own the rights to it.
Roller Coaster Values
Certainly the artist Mike Winkelmann, aka Beeple, made a splash in 2021 during a spectacular auction at Christie’s where one of his digital artwork was sold for 69 million dollars. But the value of an NFT is extremely fluctuating. As the first tweet from Twitter founder Jack Dorsey demonstrates.
Converted into NFT, the latter was sold for $ 2.9 million. When its owner put it up for sale, he asked for 48 million. Unfortunately, the first offer was for $ 280 and, a week after the sale, the amount had painfully reached the equivalent of $ 6,000. In short, we must not lose sight of the fact that all this remains a risky bet.
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