Remember the Nyan Cat, that gif of a rainbow-casting animated cat that was a viral meme in 2011. We all had seen that and you even have downloaded a copy of it for yourselves. But what you may not know is that the original GIF was sold at an online auction for 600,000 dollars? Absurd right? No. Not in the world of NFTs.
In case 2020’s absurdity needed further underlining, let me present you NFT. NFTs, have recently been the subject of an enormous amount of hype. NFT aka Non-Fungible Tokens acts as a digital deed, proving the ownership and authenticity of digital art. Throughout 2020 NFT has kept its name super glued to the headlines and has become a hot topic in the internet art community. The market for NFT ballooned in 2020 reaching a market cap of 338 million dollars. Never before we have seen interest in digital art grow so rampant so suddenly. NFT is attracting all sorts of people from artists, collectors, and speculators looking to get rich off the latest fad. All of them are ready to pay big money for works that we have seen and shared online for free.
NFT aka Non-Fungible Token is a digital certificate of authenticity in the digital world. It’s a digital signature backed by blockchain technology that proves ownership of specific digital art. To understand how NFT works, first, you need to know what fungibility is. According to Investopedia “Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type”. Like currency. But when it comes to non-fungible assets, unlike currency each NFT token is unique. That means it can’t be substituted for something similar.
Like Bitcoin, NFT is stored on a blockchain. NFT tokens hold information like the name of the creator, its price, when it was sold, and the owner’s identity. That way each token represents a certificate of ownership. And all this information is encrypted and stored on a blockchain. In the last few months, NFT has blown out of proportion.
Is it a bubble?
Amid all the excitement generated by the NFT, critics have dismissed the NFT art craze as the latest bubble waiting to burst. And who can blame them? We have witnessed so many bubbles over the years, it’s hard not to be skeptical.
Bubble or not, it came as a welcome surprise for digital artists whose works were long been undervalued and unappreciated. And a large part of this was because it was so freely available. Now thanks to NFT they can create financial value for their work and get the recognition they deserve.
Perhaps it is the latest in line with digital bubbles. Or maybe not? The only thing we say is that only the surface has been scratched in terms of its potential. Early investors are betting that profitability will come as more and more patrons and investors start selling and buying NFTs. We have to wait to see what the future holds for NFTs.