By Ivan Soto-Wright, Founder & CEO MoonPay
NFTs: the hot token on everyone’s lips. They have become an unavoidable subject for anyone involved in the cryptocurrency space, and the buzz around Non-Fungible Tokens (NFTs) has been difficult to ignore, as over the past couple of months, high profile names including Kings of Leon, Elon Musk and LeBron James have all played their part in slowly driving NFTs to become a mainstream concept, with claims that they are part of a digital revolution.
However, for many the question still remains, what are they?
NFTs are unique digital assets that exist on the blockchain. ‘Non-fungible’ means that the token is one-of-a-kind and it cannot be duplicated. As a result, NFTs are often called digital passports, given that each token contains a non-transferable identity which distinguishes it from other tokens.
NFTs are created on smart contract platforms such as Ethereum. They use cryptographically verified information to “lock” and secure a particular asset which is then held in a digital wallet – much like cryptocurrencies. This asset can then be bought or sold, but never replicated. It is this inability to replicate the token which has driven NFTs recent popularity as they prove ownership of a digital asset – a PDF, tweet, art piece or sound file.
So, how do you access NFTs?
NFTs can be purchased on a huge number of dedicated marketplaces such as OpenSea, Rarible and Nifty Gateway. Most of these accept Ethereum, but technically, anyone can sell an NFT and they could ask for whatever cryptocurrency they want. As more and more marketplaces spring up, we are seeing a huge rise in demand for solutions to transfer fiat currency into cryptocurrency to subsequently enable customers to buy NFTs.
And, why should anyone care?
It’s not the underlying tech but rather what it can be used for that is of interest to the average person. You can own an image, music, art or as demonstrated recently by NBA Topshot programme, you can own a moment. This is what’s interesting for the man on the street, this concept of digital ownership. One of the most prominent NFTs recently was from Elon Musk, a known-endorser of Bitcoin, who last month announced he would sell his tweet as an NFT. The highest bid for this was over $1.1 million.
Recent interest surrounding NFTs has focussed on those which represent digital art. A significant lack of physical events over the course of the last year has caused people to turn to the internet, where alternative forms of monetisation have soared. NFTs allow artists to solve the problem of how they are able to monetise digital artworks and have helped to financially support artists who previously had no control over how their work was being shared (often for free) across the internet.
Next month, the iconic British auction house, Christie’s, plans to auction nine one-of-a-kind NFTs from the CryptoPunk project, following significant noise in this space in February, when it became the first major auction house to capitalise on the NFT art craze and offer a digital work in NFT form. Other legacy art auction houses, including Sotheby’s and Phillips, have followed suit in selling the tokens and taking advantage of the remarkable figures they are bidding at.
Some say that the CryptoPunks project marked the beginning of the CryptoArt movement and they have largely been cited as the breakthrough that challenged the concept of owning digital art. The nine ‘Punks’ are expected to sell for millions next month and Christie’s will accept ether cryptocurrency as payment for the bids.
What’s next on the NFT adventure?
We are at the dawn of a new era when it comes to how artists and content creators can monetise their work and NFTs will continue to play a crucial role here. However, at a fundamental level, NFTs allow the establishment and enforcement of property rights. In practice the opportunities are endless, and an NFT can even be associated with physical goods.
This means that while all eyes are currently on the digital universe, it won’t be long before the leap for NFTs goes into the physical world. Ultimately, these digital passports could be the proof of ownership across all physical goods, from tickets to events, to home-ownership and even to our beloved pets. The possibilities are infinite and we are watching this space avidly.