What does NFT mean? What is it and what is an example of it?
Many were waiting Donald Trump to announce his running mate last week, but instead his announcement was release of a new cryptocurrency-based trading card set.
“They are called Trump Digital Trading Cards» he announced. “These cards feature some of the truly incredible artwork that touches my life. You can collect your Trump Digital cards just like a baseball card or other collectibles.”
While many scoffed at the idea, including members of his former entourage, the project has been a commercial success as all 45,000 cards mean they earned $4.5 million before other factors are taken into account.
NFT stands for “non-fungible token” and it can technically contain anything digital, including drawings, animated GIFs, songs, or objects in video games.
Non-fungible means it is individual. The opposite, fungible, has examples like bitcoin. One bitcoin can be exchanged for another; they are identical. But, no two NFTs are alike.
NFTs allow you to buy and sell ownership of unique digital objects and keep track of who owns them using the blockchain. An NFT can either be unique, like a real painting, or one copy of many, like trading cards, but the blockchain keeps track of who has ownership of the file.
In short, it is a digital version of owning art, an autograph or really anything digital. Therefore, the lure of owning one is to show off in a digital space, as people walking down the street wouldn’t realize you own millions of dollars worth of digital monkeys (you’ll find out about them later).
What is the blockchain?
Like a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, in maintaining a secure and decentralized record of transactions.
Blockchain ensures that the goods can be stored as safely as possible. Decentralized blockchains are immutable, meaning that the data entered is irreversible. For Bitcoin, this means that transactions are recorded permanently and can be viewed by anyone.
So what known examples of NFTs are there?
The first tweet everfrom creator Jack Dorsey, was sold for $2.9 million to an anonymous buyer. Dorsey retains control of the tweet, but the buyer basically owns it as an autograph.
Another example is that Bored Ape Yacht Club, a compilation created by Jimmy “j1mmy.eth” McNelis. They are a bunch of AI generated digital monkeys. A group of them have recently been acquired by Universal Music to form a band.
No, I don’t get that part either.
“You can call it an NFT band, or think of them as characters,” former Sony CEO Celine Joshua said in a statement via Bloomberg. “The characters will come to life. The monkeys will come to life.”
Maybe she forgot about the British band Gorillaswhich is basically the same premise, but done 20 years ago.
All of this is linked to an idea called the metaverse, a futuristic, or dystopian, design where people will live parallel lives in a 3D space. Facebook has made major inroads into this project, as founder Mark Zuckerberg is a big champion of the idea.
NFTs and cryptocurrency have lost most of their value in the past year. The collapse of major trading exchanges like FTX is affecting all cryptocurrency prices as it seems people are starting to lose faith. For one example, Bored Ape Yacht Club has seen its market value drop by $2 billion in the past eight months, according to Crypto Presales.
The environmental impact
There are many greenhouse gas emissions associated with NFTs. First, they are mostly bought and sold on marketplaces like Nifty Gateway and SuperRare that use cryptocurrency Ethereum. Ethereum, like most major cryptocurrencies, is built on a system called “proof of work” that uses a lot of energy. People “mine”, that is, crack computer code, using thousands of computers. They are then rewarded with a token.
Digiconomist estimates that the amount of electrical energy produced by Ethereum is that of the whole of Belgium, and the continued proliferation of NFTs only makes the system consume more and more energy.
