Spring is coming. The days are feeling slightly longer, the blizzards seem to have stopped nationwide, daffodils are trying to push through the solid ground – and the payment fad of the year is entering into full bloom as NFT enthusiasm is sweeping the nation.
What is an NFT?
The acronym stands for a “non-fungible token.” Based on the Ethereum blockchain, NFTs were designed to create “one-of-a-kind” digital content, by embedding specific information that makes a digital object distinct and uncopiable in any future iteration.
That doesn’t mean the content itself can’t be copied – it’s just that the NFT tag will not follow along with future copies, thus separating the real edition from the infinite copies. The idea behind NFTs, which are mostly used in the context of digital art collections at this point, is to give consumers actual and uncopiable ownership of digital work (though the artist generally still retains the copyright and reproduction rights, just as with physical artwork).
In terms of physical art, there are nearly innumerable places where one can purchase a copy of the Mona Lisa, some of which are startlingly accurate reproductions. But the real deal is a priceless artifact available for viewing in exactly one place. NFTs are meant to serve as that “real deal” authenticator for digital goods, given how easily they can be copied.
Driving Demand for Unique Digital Goods
And will people actually pay money for a “real” digital copy, given that practically speaking, it will be utterly indistinguishable from a regular copy? The answer, so far, seems to be yes.
According to reports, marketplaces are starting to spring up supporting the buying and selling of NFTs, including OpenSea, Rarible and Nifty Gateway, among others. And those marketplaces are seeing traffic. Musician (and Elon Musk fiancé) Grimes just sold an NFT-embedded 50-second music video on Nifty Gateway for $390,000. And Grimes isn’t alone – the Gucci Ghost sold for $3,600, and a looping video by Beeple sold for $6.6 million. Another piece of digital Beeple art, The First 5,000 Days, is being auctioned off by Christie’s; the bid at the time of this writing was $3.5 million.
And it’s not just visual and video art that is looking to leverage the emerging power of the NFT marketplace. American rock band Kings of Leon is jumping into the NFT party, using the tokens to build digital collectors’ items for their fans while opening up new ground in audience engagement.
The band plans to release its latest album, “When You See Yourself,” in the form of an NFT. The $50 token creates a full package for the user that also comes with a vinyl copy of the album.
The album released yesterday (March 5) on the YellowHeart ticketing and music NFT platform. It will remain open for two weeks, after which the album will be gone. Apart from buying the album package, fans can also bid on one of six “golden ticket” experiences, which offer four front-row seats to the show of their choice during each tour for life.
Kings of Leon is the first band to release a full album as an NFT, though if the release generates a lot of sales and engagements among consumers, it likely won’t be the last of its kind.
In fact, given the hundreds of thousands of dollars generated from the sale of an animated gif of a flying cat named Nyan, we’re likely about to see a lot of digital commodities with NFT strapped onto them to ensure uniqueness. Already other crypto players are moving to follow Ethereum’s lead in developing their own NFT offerings to cash in on the growing trend.
Is NFT Here to Stay, or a Flash in the Digital Pan?
Will it last? Will these new blockchain-based tokens be the future of creating and valuing digitally created art?
It’s early days still, and we are hesitant to make a prediction, given that digital artists have long been looking for a better way to extract value from their work, and NFTs do seem to be a path toward that goal. But $600,000 animated cat gifs don’t do much to confirm that this is the world’s most serious market, or that NFTs will stick around much longer than the wave of ICOs that dominated the headlines a few years back.
Now, granted, initial coin offerings had the defect of running afoul of legislators and regulators, which quickly quelled the enthusiasm. NFTs could feasibly do a lot better, and present a novel way to build digital collectors’ items for a world that is increasingly taking place online.
Then again, we’re not sure there is anything one could do to a gif that would make us part with any money at all, let along millions, to make it our own. It remains to be seen whether consumers, en masse, feel the same way, particularly when the fad’s 15 minutes of fame are up.