So you want to know about NFTs?
If you haven’t heard of NFTs don’t worry, you soon will.
NFTs or, to give their full name, Non-Fungible Tokens, are not just one of those annoying online acronyms and buzz words that seem to keep cropping up in an endless series of attempts to confuse you or make you feel behind the curve.
They are widely touted as one of the most important “disruptors” (yes that buzzword) to emerge from the world of blockchain, crypto and the decentralised online world increasingly referred to as Web 3.0
The term disruptive is often overused to describe something that simply stirs things up a bit. But in this context it really could be disruptive as the use of NFTs (and I will get onto what they are soon) really could change the way we do things in Art, Culture, Heritage, Games, Finance and lots of other things too.
So what is an NFT?
A Non Fungible Token is a unique digital asset the ownership of which is secured and confirmed via blockchain. Blockchain is a shared, unchangeable digital ledger that facilitates the process of recording transactions and tracking assets (tangible or intangible) in a business network. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
Some describe them as the digital solution to “collectables”
NFTs have value and each one is unique. The ownership of NFTs can change and be tracked in an incontrovertible way. But being “non-fungible” these assets have value in their uniqueness and are not replaceable or, by definition, “fungible”. In essence, something 'fungible' is something that can be replaced by an identical item, but something non-fungible cannot. It is completely unique - like swapping a one of a kind trading card, what you would get back would be something different.
So I could own an NFT and I could sell it to you for a price we agree on, transfer it to you and there would be no question of that NFTs provenance or its ownership and that information would be open and transparent to the world by virtue of its traceability via blockchain.
It makes one of the great challenges of digital content less of an issue in that an NFT gets around the inherent copy ability of digital content.
You can acquire NFTs by buying them or you can even create them yourself. So, if you create some digital art, a new song, an item in a game, some land in a virtual world, or a digital asset derived from a physical item, like a deed of ownership, it can take the form of an NFT.
To create an NFT requires a coder to develop what is termed a “smart contract” that determines certain aspects, logic and characteristics associated with the NFT. For example, it is possible to code in that a percentage of every sale of the NFT throughout its ownership journey could revert to the original creator.
And all of this can be done in the decentralised online world of blockchain without the need for intermediaries.
With this ability to, use the technical geeky term, “mint” an NFT you can see that it creates a whole new world of possibilities to create unique digital assets that can generate value for creatives.
But the creation of an NFT and any subsequent transaction associated with it takes computer power to add blocks to the blockchain and to verify its ongoing validity.
This activity takes computing power and NFTs, like many blockchain-related activities, like “mining” cryptocurrencies, are increasingly seen as bad for the environment due to the power consumption associated with it. As a result new less power demanding alternative consensus mechanisms are being developed to operate the underpinning technology, the blockchain or “distributed ledger” as it is sometimes known, to tackle some of these concerns.
The world of the NFT is then a rapidly developing one in terms of what it can do and how it operates.
Nevertheless, for all its relative infancy, we can see more and more examples of NFT use in different creative and heritage settings. Be it Jack Dorsey selling an NFT of the first tweet for $2.9 million, Mirror allowing writers to monetise their journalism as NFTs, Grimes selling $6 million worth of her digital art, Ubisoft proposing the introduction of NFTs to purchase in-game items, or Whitworth Gallery creating and putting the first UK museum collection NFT up for sale to support social projects and making it available on an environmentally friendly platform. The examples are many and they are something that is likely to be here for some time.
To that end, we plan to release on the Xponorth website and through its range of events a series of content exploring all aspects of NFTs and the world of crypto and blockchain in the creative and heritage sectors.
So keep watching this space as we take you to a decentralised future.
