2021 has been the year of the NFT. If you have so happened to spend even half an hour on the Internet over the last few months, you would have inevitably come across this mysterious and unprecedented layer of the crypto realm. Standing for non-fungible tokens, NFTs have done for the world of collectables what Bitcoin has done for currency. While not all experiences with NFTs have been favourable, there's no denying that the thirst for these unique digital tokens isn't going anywhere. To prepare you for the inevitable conversation you're sure to have in a crowded bar with friends at some point, here, we're breaking down exactly what an NFT is.
What is an NFT?
An NFT is a unique digital asset that represents a real-world object – including, but not exclusive to art, music, in-game items and videos. Similarly to cryptocurrency, NFTS are bought and sold online, and are encoded with the same encryption software as many other crypto-forms. The name itself – non-fungible tokens – is particularly of note. In the world of economics, a fungible asset is something that can be readily interchanged, like money for example. In the case of NFTs, this is impossible; meaning that the digital asset has unique properties that cannot be interchanged or replaced with something else.
Why does this matter? In contrast to the common rhetoric around digital creations being in constant supply, NFTS are one-of-a-kind and each have a digital signature. So, while you might still be able to view the asset online for free, the NFT allows the buyer to actually own the rights to the original item.
How do NFTs work?
Similarly to cryptocurrency, a history of who owns the NFT is stored on a public ledger known as a blockchain. As for how NFTs are created, they are "minted" from digital objects that represent both tangible and intangible items. Although art and collectable items may be expected assets on the list, items such as designer sneakers, videos and sports highlights and even tweets count. Twitter co-founder, Jack Dorsey, for example, sold his first-ever tweet for more than $2.9 million USD.
In its more simplistic form, is like a physical collector's item, only digital. So, instead of receiving an actual oil painting in the mail, instead, the buyer will receive a digital file instead. Another point of note is that there can only be one owner of the NFT at one time. Thanks to the digital nature of the token and a little thing called meta data, it's also very easy to tell whether the NFT is the original or a copy.
What are NFTs used for?
Part of the reason why NFTs have become so popular with artist's and creators is because the platform gives them a unique opportunity to monetise their assets that isn't reliant on galleries or auction houses. NFTs entirely remove the middleman, meaning that artists can sell directly to consumers. Not only does this mean they have more control over their profit, but they can also program in royalties so they’ll receive a percentage of sales whenever their art is sold to a new owner.
Which celebrities and artists have sold NFTs?
As the NFT game has continued to dominate, many of the world's biggest celebrities and artists have joined in. Iconic model Kate Moss announced last month that she would be trying her hand in the realm of digital assets; launching a series of limited-edition NFT artworks featuring Moss captured in private moments. The British model, who has always been heavily involved in the art scene capitalised on the growing interest – donating a percentage of the profits to Adwoa Aboah’s Gurl’s Talk.
For Emily Ratajkowski, her intentions are slightly different. After speaking candidly about her experiences in an essay published by The Cut late last year, the model and author is auctioning off a NFT as a way of reestablishing authority over an image that was used without her consent. The image in question was part of Richard Princes' 2014 New Portraits series – and is an 'Instagram painting' of Ratajkowski from her first Sports Illustrated swimsuit issue appearance.
The NFT on auction is a digital composite showing Ratajkowski, photographed in her New York apartment, posing in front of the Prince painting she bought back that hangs in her Los Angeles home.
Other celebrities who have launched NFTs include The Weeknd, Snoop Dog and Lindsey Lohan.