The last week has seen many headlines regarding NFTs, a digital craze that has taken the modern art world by storm.
or those scratching their heads, or looking to get in on the trend, here is an explainer on everything you need to know.
What are NFTs?
The term stands for non-fungible tokens. If something is ‘fungible’, this means it can literally be replaced by another identical item (or items).
For example, if you have a £10 note that can physically be swapped for a fiver and five pound coins, it still holds the same value, so the physical money is “mutually interchangeable”.
If something is non-fungible, then it is not interchangeable, which is where NFTs come in. A NFT is a type of special ‘crypto’ asset, a unit of data stored on a digital ledger called a blockchain that certifies a digital asset to be unique not interchangeable — there is nothing else like it.
How do they work?
If you’ve heard anything about cryptocurrencies — new digital alternatives to physical money such as Bitcoin — a NFT is probably best described then as a digital collectible.
But unlike Bitcoin, which are identical by design, NFTs are unique. They can be used to represent items such as photos, videos, audio, and other types of digital files.
Say you buy Cristiano Ronaldo’s football boot, which he has signed. If it is genuine and truly his, the seller will also provide with it a certificate of authenticity and maybe even a certificate officiating your ownership.
So, in terms of NFTs, they can be thought of as digital signatures backed by blockchain technology which act as authentic certificates of ownership for virtual or physical assets.
The records of ownership are stored on the blockchain, which is a system of recording information in a way that makes it difficult or impossible to change, hack or cheat the system.
Why are they becoming popular all of a sudden?
NFTs have taken off recently, particularly in the celebrity world, with famous faces both purchasing them and launching their own ranges.
During the week John Lennon’s son Julian announced he would be selling Beatles memorabilia as NFTs, including the black cape his father wore in the film Help!
This means Julian won’t be parting with the band’s physical assets, but rather, he is selling off the digital rights to them.
Multiple footballers have also been promoting NFTs recently.
Former Chelsea captain John Terry may even be in hot water with the Premier League, as it is seeking legal advice over images of its trophy being used in cartoons of baby apes the ex-England star has been endorsing.
Football superstar Lionel Messi released his own NFT art collection last August 2021 depicting historic moments from his career. NFTs’ sales spiked to US$3.4m on day of the launch.
Do NFTs have to be worth millions?
In theory, anyone can purchase a NFT for any given price, but the most extravagant sales have been making headlines.
For example, last year online artist Mike Winkelmann (Beeple) sold a work for an incredible $69m — the most expensive work of digital art in history.
There’s nothing stopping any one copying Beeple’s art. In fact, the image has been shared by millions. However, the buyer of the NFT owns a ‘token’ that proves they own the original work — it can kind of be compared to officially owning that signed Ronaldo football boot.
Belfast-based cryptocurrency expert Johnny McCamley said this type of success caused “a massive surge for artists to tokenise their art”.
What are the benefits of creating or buying NFTs?
Johnny, who created CryptoClear, an online educational platform to teach people more about how cryptocurrencies work, believes NFTs can help local artists sell their work to a brand new audience that would never have seen it before.
During lockdown he helped Bangor business Hillview Prints sell its artwork on the blockchain.
“We can tokenise the art by minting it on the blockchain and there are many benefits to the artist. It’s risk free and another source of income; we incur the initial fees and we set up and manage the art sale through the various platforms,” the 23-year-old explained.
In layman’s terms, minting is the process of creating or producing something.
North Belfast creator Naomi Gray has been posting her digital drawings of Northern Ireland as NFTs.
“My next project will be a NFT collection generated through Photoshop,” she said.
“Not only are NFTs here to stay, they will get bigger and the possibilities are endless. It’s a new opportunity for artists and creative opportunists. I don’t know any famous creators in NI, they haven’t broken out yet.”
She believes “what is going to set creators apart is providing additional benefits of owning the NFT — it could completely change the music industry where the fans are the owners of the music rights and not a producer/manager of a musician etc”.
So, NFTs definitely aren’t a scam?
We know it sounds made up, but NFTs are actually legitimate. That doesn’t mean, of course, that they don’t come with ridicule.
Melania Trump, for example, had a bit of a flop this week when the NFT of an animated version of the white hat she wore to meet the French President failed to reach the number of bids she had hoped for.
The former first lady announced earlier this month she would auction off the autographed wide-brimmed hat, a watercolour painting of herself wearing the hat and the NFT of the painting.
She insisted all bids be made in a cryptocurrency. When the auction concluded on Wednesday, there were only five offers on the items, which were about $80,000 short of the opening bid threshold.
Last year Monty Python star John Cleese described the phenomenon as “completely absurd” after offering his own tongue-and-cheek drawing of New York’s Brooklyn Bridge for sale at £50m.
“You have to pretend it’s exciting and new, otherwise you can’t get people to depart with their money. But I think an enormous proportion of it is bulls***,” he said at the time.
It’s likely the NFT fixation won’t last forever, but there’s definitely money to be made for creators hoping to jump on the bandwagon, and it’s anyone’s guess as to what the next weird and wonderful digitised drama will be.