You may have heard the buzz about NFTs recently and been wondering what they are. If so, you aren’t alone. Recently, the Nyan Cat NFT image below sold for approximately $580,000. (Yes, you read that right!) So what’s the big deal about NFTs and do they have any connection to education?
What’s an NFT?
Wikipedia defines an NFT (Non-Fungible Token) as “a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable” (source). Unlike crypto-currencies, like Bitcoin, NFTs are, by definition, not “fungible,” meaning that each one is unique and not interchangeable with any other (one Bitcoin is the same as another one, making it fungible). The key takeaways about NFTs are that they are digital (electronic only; can’t physically hold them) and that they are licensable.
They are also very big business right now. The NFT market value tripled in 2020, reaching more than $250 million in sales. And during the first quarter of this year, NFT sales exceeded $2 billion. In May, people were buying and selling an estimated 85,787 NFTs—at a total value of $5.8 million—a day, according to application tracking firm DappRadar. That’s in spite of the fact that the owner of an NFT does not own the copyright to the item; that remains with the creator, who can go on to sell it again and again if he so desires.
What Kinds of Things Are Sold as NFTs?
Technically, anything digital can be sold as an NFT. The market started with the sale of digital art. “For example, “the digital artwork entitled ‘Everydays – The First 5000 Days’ (above) by artist Mike Winkelmann, also known as Beeple, sold for $69.3 million in 2021″ (source). This made it the third-highest auction price achieved for a living artist. Then the market moved on to include collectibles, games, music, film, and fashion. Recently, a game called CryptoKitties was introduced that allowed users to trade and sell virtual kittens like the one below that sold for … wait for it … $172,000.
How NFTs Might Be Relevant to Our Students
It is clear that NFTs are currently a speculative market primarily for investors. But do they have a long-term future for others? Tech expert and art collector John Dodelande believes so. He says that ““NFT is not a ‘fad’ or a passing trend. It will continue to prosper, complimenting the art market rather than disrupting it.”
So what might that mean for our students? Well, if they have any artistic talent at all (and I do mean any), they may be able to sell their works digitally as NFTs and make a very nice profit. In addition, the ability to digitally store and track art work back to the original creator has some merit. NFTs also create opportunities for new business models that didn’t exist before such as new art platforms and enhanced media and special perks for music fans.
But there could be more. “The potential of NFTs goes much further because they completely change the rules of ownership. Transactions in which ownership of something changes hands have usually depended on layers of middlemen to establish trust in the transaction, exchange contracts, and ensure that money changes hands” (source). But that’s not necessary with transactions recorded on blockchain.
Whatever its future, NFTs provide a new way to think about art, ownership, copyright, and the safe sale of items.