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 acquire (financial) value.
Why should anyone pay money for a ‘digital image’?The simple answer is: supply and demand. By making 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 NFTs. “By treating it as a collector’s item, it naturally becomes sought after. And when demand exceeds supply, it becomes worth more.”
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Something like that can never be big, can it?You would think so, but the opposite is true. For example, the NFT from the very first tweet, from Twitter founder Jack Dorsey, was sold for $2.9 million. Last year in particular, astronomical sums were paid. Artist Beeple auctioned a series of paintings for $68 million and last month it was… The merger, a digital artwork by anonymous artist Pak, sold for $92 million. A 12-second video of a LeBron James dunk previously raised $208,000. And believe it or not, images of monkeys (Bored Ape Yacht Club), kittens (CryptoKitties, where it started in 2017) and robots (Mekaverse) sometimes sell for tons.
Does the owner of an NFT also own the copyright?None. Even if the file has been assigned to the person who acquired the NFT, it can still be used by others online. For example, the 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 you can’t actually sell anything with such a token because it has a certain (financial) value.
How can I buy or sell an NFT myself?If you want 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. Actually, this is a kind of marketplace where you can search for files you want to own or trade. Most transfers are done 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? Transactions around NFT are powered by the same technology as Ethereum. Payments go through blockchain, a digital ledger known for its anonymity and security. In a way, NFT is similar to cryptocurrency: you attach something purely digital value. Yet they differ from each other in crucial points because an NFT is always unique. A bitcoin is fungible – it doesn’t matter which 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, 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 soccer clubs jumped on the NFT bandwagon, and last fall the cycling team Jumbo-Visma auctioned off the NFTs for some wins by their Belgian star Wout van Aert. His stage win in Paris in the 2021 Tour de France sold for around €16,000 to @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 this all sound like another hype that could collapse at any moment?Yes and no. That’s what the madman pays 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, $25 billion worth of NFTs were traded, compared to just $94.9 million the year before. However, financial experts note that the rise in prices of items appears to have stalled. The risks are as great as with cryptocurrencies and investing: money can disappear before your eyes. @skaanbarry says it will have made a net profit of 750,000 euros by 2021, but warns: “This could definitely collapse in a short time. That’s why NFTs do not make up more than 5 percent of my entire crypto portfolio. I certainly will don’t run any risk in’.
What kind of people trade NFTs? The world of NFT traders is hard to fathom, as many users are anonymous, just the same @skaanbarry: “It is primarily for my own safety. It involves large amounts of money and I don’t want to get hacked, or worse, get robbed.” Based on that anonymity, it is a prestige to show off possessions. “Show boating how rich you are, kind of like rappers do with their watches.” The very expensive avatar on social media is therefore a sign of wealth. A large number of users are also very active in trading cryptocurrencies. The stereotyping means that it is mainly a ‘man thing’, but the bitcoin platform BTC-Direct reports that more and more women are signing up, also in NFTs. It is true that, more than men, they primarily invest for the long term. A popular platform is World of Women, where Hollywood stars Eva Longoria and Reese Witherspoon are very active.
Is it all 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 the practice is mostly simpler: most users are there for the money. So too @skaanbarry. “I’m doing it purely to make money. I wanted to be a millionaire before I was 35. It’s already been 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 to which you have no rights is worth so much?Yes. Also @skaanbarry is surprised by the dizzying buzzes going around it. “You have to look at it a bit like the crazy prices that people pay for physical Pokemon cards. I find it absurd myself. I once sold something from Mekaverse for 50 Ethereum, equivalent to $200,000. I would never use something like that. You have to stay realistic: at the end of the day, it’s just a 2D image.”