Is it valuable digital artwork, or is it hot air? Billions are involved in the world of non-fungible tokens (NFT). How exactly does it work? Who deals with it? And is not that hype?
What is an NFT in plain language?
NFT stands for non-fungible token, which is a non-exchangeable currency. It is the proof of ownership of a digital file. And it can be anything: A sword in a computer game, a digital painting, but also, for example, a piece of text. In fact, any digital file can become an NFT. As soon as a certificate of ownership is available, it can have (economic) value.
Why would anyone pay money for a ‘digital image’?
The simple answer is: supply and demand. By creating something unique and exclusive, you create scarcity. “If you have enough people who want something, the price goes up,” says the Belgian NFT user @skaanbarry, who says he makes tons a year trading with NFTs. “By treating it like a collector’s item, it naturally becomes coveted. And when demand exceeds supply, it becomes more valuable. ”
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Such a thing can never get big, right?
You would think so, but the opposite is true. For example, NFT from the very first tweet, from Twitter founder Jack Dorsey, was sold for $ 2.9 million. Especially last year, astronomical amounts were paid. The artist Beeple auctioned a series of pictures for $ 68 million and last month it was … The merger, a digital work of art by anonymous artist Pak, sold for $ 92 million. A 12-second video of a LeBron James dunk previously earned $ 208,000. And believe it or not, pictures of monkeys (Bored Ape Yacht Club), kittens (CryptoKitties, where it started in 2017) and robots (Mekaverse) are sometimes sold for tons.
Does the owner of an NFT also own the copyright?
New. Although the file has been assigned to the person who acquired the NFT, it can still be used by others online. For example, NFT from the famous internet meme ‘Charlie bit me’ (a boy bites the finger of his slightly older brother) was sold for $ 760,000, but it can still be seen on all kinds of channels. So one can actually not sell anything with such a token because it has a certain (economic) value.
How can I buy or sell an NFT myself?
To shop digitally, you must have a digital identity. You must therefore have an account with a wallet, for example on the Open Sea platform, where NFTs are auctioned. In fact, this is a kind of marketplace where you can search for files you would like to own or exchange. Most transfers are made via the Ethereum cryptocurrency, so it is advisable to invest in it first.
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What does cryptocurrency have to do with this again?
NFT transactions are powered by the same technology as Ethereum. Payments go through blockchain, a digital cash book known for its anonymity and security. In a way, NFT is similar to cryptocurrency: you attach some purely digital value to it. Yet they differ from each other in crucial points because an NFT is always unique. A bitcoin is interchangeable – no matter what bitcoin you have, they are all the same – while an NFT represents a unique digital object.
How popular are NFTs in the Netherlands and Belgium?
The amounts in the low countries are not so astronomical yet, although many artists try to sell their works through NFT. In Limburg we have to wait for the auction of a work by the artist Pablo Lücker to start. Dutch football clubs jumped on the NFT train, and last autumn the cycling team Jumbo-Visma auctioned the NFTs for some victories by their Belgian star Wout van Aert. His stage victory in Paris in the Tour de France in 2021 was sold for about 16,000 euros more @skaanbarry† His wallet says NFT is already worth $ 32,000. @skaanbarry: “But that’s just the price I put on it myself.”
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Doesn’t it all sound like the umpire hype that could collapse at any moment?
Yes and no. That’s what the maniac does for it, and it’s no different in ordinary life. Have houses really doubled in value in the last five years, or is it just because people are talking about it? The market for NFT is growing at a ridiculous rate. In 2021, NFTs were traded for $ 25 billion, compared to just $ 94.9 million the year before. Financial experts note, however, that the rise in the price of objects appears to have stalled. The risks are as great as with cryptocurrencies and investing: Money can evaporate before your eyes. @skaanbarry says it will have achieved a net profit of 750,000 euros by 2021, but warns: “This could definitely collapse in a short time. That’s why NFTs make up no more than 5 percent of my entire crypto portfolio. I certainly will do not run any risk in ‘.
What kind of people trade in NFTs?
The world of NFT merchants is hard to fathom, as many users are anonymous, as is @skaanbarry: “It is primarily for my own safety. It involves large sums of money, and I do not want to be hacked, or worse, robbed. ” Based on that anonymity, it is a prestige to display belongings. “Show sailing how rich you are, a bit like rappers do with their watches.” The very expensive avatar on social media is therefore a sign of wealth. A large proportion of users are also very active in trading cryptocurrencies. The stereotyping means that these are mainly ‘male things’, but the bitcoin platform BTC-Direct reports that more and more women are signing up, also in NFTs. It is true that they more than men primarily invest in the long run. A popular platform is World of Women, where Hollywood stars Eva Longoria and Reese Witherspoon are very active.
Is it about art and property or is it just money?
There are undoubtedly artists who, for ideological reasons, argue that it is beautiful and logical that digital objects can also have value. But practice is mostly simpler: Most users are there for the money. So too @skaanbarry. “I do it solely to make money. I wanted to be a millionaire before I was 35. It’s already done. And if it continues like this, I can retire in two years when I’m 35.”
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Isn’t it still bizarre that a digital file that you do not have rights to is worth so much?
Yes. Also @skaanbarry is amazed at the staggering sums that go around. “You have to see it a bit like the crazy prices that people pay for physical Pokemon cards. I find that absurd myself. I once sold something from Mekaverse for 50 Ethereum, equivalent to $ 200,000. I would never use such a thing. You have to stay realistic: at the end of the day, it’s just a 2D image. “