Editor’s Note: SOFREP encourages our members to submit content to us for publishing consideration. Today we begin a series by Miguel Castro who is writing about NFTs or, Non-Fungible Tokens. It may seem like a rather nerdy topic for a site like SOFREP, but NFTs are becoming important in the digital world we all partly inhabit for better or for worse. They establish a right of ownership of the software code medium that becomes art, music, computer programs, and even real estate in virtual worlds. Most NFTs are bought and paid for with digital currency like Bitcoin and Ethereum thus representing an entirely digital economy of virtual products paid for with virtual currency.
If you spend at least a couple of hours meddling down the internet rabbit hole, whether you’re visiting news or entertainment sites, spending time on social media, or even playing games, you will have probably come across the acronym NFT and some very insane news about the money they might be worth. But very few articles actually give you an in-depth guide on what they are, how they came about, where they are going, and of course, how to get involved in that sexy, but very confusing new internet world.
This series of articles will try to answer these questions.
What Is an NFT
So let’s start with some basics.
NFT stands for Non-Fungible Token. It is a piece of digital content that exists on the blockchain, and through its existence has an ownership contract attached to it.
At the very core of that definition is that no two NFTs are alike, worth the same, nor are equally traceable. To put it simply, at the exact moment of a certain valuation we could trade one dollar for another, a Bitcoin for another Bitcoin, and so on and so forth. The thing with NFTs is that their value is more on the appreciative side, depending on their rarity, the artist, platform, or moment.
NFTs can really be a lot of things. Lately, all the fuzz is about the unique digital artworks being sold on numerous marketplaces (we will get into those in a later article), but they are not limited to that. NFT’s can be game assets, event tickets, games, video content, website domains, and even property deeds or means of identification.
What makes an NFT so special is the blockchain/smart contract part. Since it is minted on the decentralized blockchain it’s practically impossible to corrupt, hack, or duplicate. And if someone does duplicate an NFT, the blockchain can prove, without a shadow of a doubt, who owned it first.
A Jump in Popularity
NFTs have been around for a while but recently started making mainstream news after a digital artist called Mike Winkelmann, better known in the online world as Beeple, sold a compilation of his artwork through Christie’s, a renowned auction house. The artwork was sold for no less than the sweet sum of $69 million dollars.
Yes, you read that right, the guy sold a .jpg file for almost 70 million dollars in an auction.
But the hype has been brewing since 2017 when a company called Larva Labs created the CryptoPunks, 10,000 unique NFTs, and gave them away for free. Some of those have since then been sold for over $10 million, while most of them were resold for at least over $25,000.
However, there was a catch. Larva Labs created the CryptoPunks with a smart contract that guaranteed that every time they were resold a percentage would go to the original owners, so the company has since earned a solid amount.
There is a lot to say and tell about what has happened with the CryptoPunks since their creation, but let’s save that for the CryptoPunks Special.
So welcome to the world of the Non-Fungible Tokens, an entirely new way to sell and distribute digital assets, to create and to be compensated for your creativity, and to support a cause you believe in. But especially, welcome to the future, because NFTs are here to stay, and they are going to, slowly but surely, change the world.
Mr. Castro is the founder and former director of Trastienda, a Strategic Marketing, Content and Communications Firm founded in 2014. Focused on Business Development, Trastienda clients include companies such as CMLL, Modelo, Libbey Glass Company, and TV Azteca. Today he consults for PlayStation, spearheading their business development for licensing in Latin America.