An exclusive digital artwork is being sold at Christie’s for a astronomical sum of $69 million (+37 billion CFA), but the winning bidder will not receive a sculpture, painting, or even engraving.
Instead, it will receive a unique digital code called an NFT.
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If bitcoin was hailed as the digital answer to currency, NFTs are now described as the digital answer to collectibles.
But many skeptics believe this is a bubble about to burst.
What is NFT?
NFT is an acronym for “Non-replaceable Token”.
In economics, an exchangeable asset is something whose units can be easily exchanged, such as money.
With cash, you can exchange a £10 (7,639 CFA) note for two £5 (3,819 CFA) notes that will have the same value.
On the other hand, if a good is not replaceable, then this is impossible – this means that it has unique properties and cannot be exchanged for another good.
It can be a house or a painting like the Mona Lisa, which is unique. You can take a picture of the painting or buy a copy, but there will only be one original painting.
NFTs are “unique” assets in the digital world that can be bought and sold like any other good, but they don’t have a tangible form of their own.
Digital tokens can be considered as certificates of ownership of virtual or physical assets.
Traditional works of art, such as paintings, are valuable because they are unique.
But digital files can be copied easily and indefinitely.
With NFTs, artworks can be converted into a “token” to create a digital certificate of ownership that can be bought and sold.
As with cryptocurrencies, the ledger that owns what is stored in the shared ledger is called the blockchain.
Records cannot be tampered with as the ledger is maintained by thousands of computers across the world.
NFTs can also contain smart contracts that can give the artist, for example, a share of any future sale of the token.
What stops people from copying digital art?
no thing. Millions of people have seen Beeple’s business sold for $69 million (+37 billion FCFA) and the image has been copied and shared countless times.
In many cases, the artist retains copyright to his work, allowing him to continue producing and selling copies.
But the NFT buyer has a “token” that proves they own the “original” work.
Some people compare it to buying a signed edition.
People pay millions of dollars for tokens?
Yeah. It’s brutal as it sounds.
What is the value ofis nft?
In theory, anyone could turn their business into a token to sell it as NFT, but the interest has been fueled by multi-million dollar title sales lately.
On February 19, an animated GIF by Nyan Cat — a 2011 meme depicting a flying cat as a tart pop-up — sold for more than $500,000 (over CFA274 million).
A few weeks later, musician Grimes sold some of her digital artwork for over $6 million (over CFA 3 billion).
It’s not just art that is coded and sold. Twitter founder Jack Dorsey promoted NFT for the first tweet, which reached bids of $2.5 million (CHF +1 billion).
The sale of Christie’s NFT by digital artist Beeple for $69 million (over FCFA 37 billion) has set a new digital art record.
But as with cryptocurrencies, there are concerns about the environmental impact of blockchain maintenance.
Is it just a bubble?
A day before the record auction, Pebble – whose real name is Mike Winkelman – told the BBC: “I really think there will be a bubble, to be perfectly honest.
“And I think we might be in that bubble now.”
Many are more skeptical.
David Gerrard, author of “Attack of the 50-ft Blockchain,” said he views NFTs as buying “official collectibles,” similar to trading cards.
“There are artists who are totally dependent on these things…you probably wouldn’t,” he warned.
He added that the people selling NFTs are “crypto claws”.
“These are the same people who have always been hard at work, trying to devise a new form of a worthless magic pill that they can sell for money.”
Charles Allsopp, a former Christie’s auctioneer, said the concept of buying an NFT “doesn’t make sense.”
“The idea of buying something that doesn’t exist is a strange one,” he told the BBC.
“I think the people who invest in it are a little goofy, but I hope they don’t lose their money.”