What is NFT?
The blockchain-based technology that allows the auctioning of news and works of art
Projects based on the technology that has made it possible to sell works of art for tens of millions of dollars have arrived.
NFT -Non Fungible Token- is a token that represents something. We can think, for example, of music festivals where drinks are paid for with plastic tokens. These tokens have a value, they represent the cost of a couple of minis of beer, a soft drink or a hamburger. They are coins but in another format and with a much more limited application to a circumstance, to a moment.
Tokens have certain advantages. One of them is that they do not have a value in themselves, but have a value because of what they represent. It would be of little use for a thief to steal the tokens with which festival-goers pay for their drinks. Outside the venue, they are nothing more than plastic. Blockchain has made it possible to digitize this type of asset so that they can be used in closed networks – festivals, venues – on the Internet.
Examples abound, but the most famous NFT artist so far is Beeple, who first sold 21 artworks on the Nifty Gateway digital marketplace for a total of $3.5 million. He then sold his masterpiece ‘EVERY DAY: THE FIRST 5000 DAYS’ at Christie’s for $6.5 million. Beeple is Mike Winkelmann, formerly a graphic designer from Charleston, South Carolina.
Artwork isn’t the only thing trading in these markets. More and more volume in the NFT space is coming from the trading of digital sports cards. In fact, basketball fans have already spent $230 million trading NBA Top Shot cards, CNBC reported. These cards depict certain classic moments in sports and there are only a limited quantity of each. The ownership and scarcity of these cards are secured by the Ethereum blockchain. Recently, a rare Lebron James highlight was sold to the highest bidder for $200,000.
According to William Mougayar, author of the book ‘The business blockchain’, a token is “a unit of value that an organization creates to govern and manage its business model and give more power to its users to interact with its products, while facilitating the distribution and sharing of benefits among all its shareholders”.
It can be summarized as a sort of mark or seal that guarantees a user, for example, a stake in a company, executed through a round of financing or stock purchase. Since it is based on blockchain technology, everything that happens with this token is registered. The entire network knows what happens with each person’s token. It’s like playing Parcheesi. If everyone is in the game, it’s hard to cheat. That’s the value of blockchain. All participants/teams participating in the network share the records, so if someone tries to modify the content of a token, the change must be validated by all members of the network. This makes scams much more difficult. It guarantees the veracity of what the token represents.
Fungible tokens are those that are indistinguishable from each other. In the case of bitcoins and other virtual currencies all the tokens that represent each unit of this currency are the same. They can be exchanged. In the case of NFT (Non Fungible Tokens) each unit is unique in itself. It represents something unrepeatable. For this reason this type of token is used in specific cases as a tool for auctioning everything from virtual works of art to digital media information.
A user who buys a work of art and receives the token that represents it will be able to resell it in the future. The buyer will know that what he or she is buying is indeed a genuine work of art, thus ensuring that it belongs to the artist who created it, and that the work is authentic. When this token –which can also be associated with physical works- is purchased by another person at auction, the creator can collect a percentage of the transaction. The token stores all the information about what has happened to the work – when and to whom it was sold, at what time, and so on.
