What are NFTs?

A non-fungible token is a unit of data, or an internet file, stored on a blockchain. For those still scratching their heads, blockchain, simply put, is a platform where you can create and distribute such content in a way that minimises the chances of hacking, cheating the system, or duplication of your precious intellectual property. On these blockchain ‘digital ledgers’, such files can be sold and traded. Common types of NFTs are photos, videos, and audio.

If you are wondering why this is such a big deal – because you already share photos, videos, and audio files on the internet – you are not alone. Why is labelling them as NFTs any different? Essentially, instead of internet and ad companies owning, profiting from, and controlling the content you share on their platforms, owning the NFT file means you own the rights to it. You can protect the work you create.

As Kayvon Tehranian puts it, “NFTs are a certificate of ownership of your internet files, registered on the blockchain, for everyone to see. It is not dissimilar to your legal ownership of a physical home”.

 

 

What Are NFTs Worth?

The most expensive single NFT is a digital collage of images known as The First 5000 days. Created by Michael Winkelmann, a digital artist known as ‘Beeple’, this collage sold for $69.3 million.

The First 5000 Days is an important artwork in the NFT community as it paved the way for mainstream audiences to explore on-fungible assets.

There has however been a more expensive NFT sold but it is a little different. The Merge is a digital artwork created by an anonymous digital artist nicknamed Pak. It was sold on Dec. 6, 2021, for $91.8 million on the NFT decentralized marketplace Nifty Gateway.

However, the piece was fractionalized to 312,686 pieces distributed to 28,983 buyers. The catch here is that The Merge was a single artwork composed of a collection of “masses” that users could buy.

These pieces could be stockpiled to make a bigger mass and sell it on the secondary market. By the end of the sale, a total of $91.8 million was spent, making it the most expensive NFT sold to date.

‘Alien Cryptopunks’ also dominate the most expensive NFT listings. These are unique pixel art collections, made using algorithms.

With over 2.4 million NFTs created and in circulation, and over $4.8 billion in trade, the average NFT value ranges between $1,500 and $6,500.

 

How Are NFTs Disrupting Commerce?

Unlike ownership of files in the physical world, NFTs do not attempt to remain private. They are made for sharing. One’s ownership does not prevent others from interacting and enjoying it. The greater the publicity, the greater the value. Buying and selling NFTs can be compared again to real estate in the physical world – values grow as NFTs gain in popularity and demand.

Furthermore, they are changing how we exchange currency across geographic boundaries. An instant payment system, international wire transfers, foreign exchange and customs charges are all circumvented.

 

Summary

NFTs are reshaping ownership, experience, and trade of intellectual property on the internet. They open new possibilities whereby rights are placed in the hands of creators, and not the hands of a few mega-corporations. They are disrupting commerce and the status quo that since the conception of the internet, services the needs of the all-powerful ad platforms. NFTs have the potential to be a true value-leveller for the internet users and creators of the future.