By Nathan Bickerton, Masters student in digital business, Liverpool John Moores University
Would you spend $69.3m on a piece of digital artwork?听
Me neither听鈥撎�but听welcome to the world of non-fungible tokens (NFTs), which are turning the world of digital art on听its head.听听
Next week Sotheby鈥檚 will launch 鈥楾he Fungible Collection鈥�, its debut non-fungible token sale in partnership with Pak, who became the first NFT artist to earn $1m for their work in December.听
To understand why it鈥檚 so important we must explain what NFTs are.听
NFTs are unique digital assets which are tokenised on the blockchain to certify authenticity and create value.听
Digital assets can be听anything,听but notable assets include digital art, video footage, memes, tweets and virtual land.听
NFTs get value from what is described online as 鈥榗lout鈥�, meaning fame and attention.听
NFTs are primarily traded for cryptocurrency like Bitcoin and Ethereum which exist on the blockchain. Cryptocurrencies are lucrative and so are NFTs.听
The value of NFTs seems to听be based on the assumption听someone else will pay more for it听at a later date, like art.听
NFTs are spectacularly valuable, though. One NFT managed to make global headlines selling for $69.3m at a Christie鈥檚 auction.听听
In 2007, digital artist Mike听Winklemann听(Beeple) started creating one piece of digital art every day.听Winklemann听named his daily challenge 鈥�Everdays鈥� and kept it up for 5,000 days.听
Recently,听Winklemann听combined all 5000 images together to create 鈥楾he First 5000 Days鈥�. This JPEG file soon received clout like no other;听奥颈苍办濒别尘补苍苍鈥檚听First 5000 Days sold for $69.3m at Christie鈥檚 and became the spark that lit the flame.听听
But NFTs are more than just art. Jack Dorsey, the founder and CEO of Twitter, recently tokenised his first听tweet听听and it sold on the trading site Valuables听for $2.5m in the Ether听crypto-coin.听
The purchaser,听Sina听Estavi, compared Dorsey鈥檚 tweet to听Leonardo da Vinci’s听Mona听Lisa.听
The value of Dorsey’s tweet comes from it being a key moment from the story of Twitter鈥檚 creation.听
Dorsey鈥檚 tweet certainly has clout so the expectation is that its value will rise. Twitter鈥檚 founder has said听he will convert the proceeds to Bitcoin and then donate them to the Give听Directly’s听Africa Response fund.听
NFTs get crazier still. There is an online game听called听听which is basically Google听Earth听but you can purchase and trade NFT tiles of land that cover the entire surface of the earth!听
If you want to buy an NFT, you only need two things: crypto-currency and access to an NFT marketplace.听
However听critics believe NFTs are a bubble that will eventually burst and point to their impact on the environment because they use a huge amount of energy.听Watch this space.听
Cryptocurrency