What are NFTs and why are they valued in millions of dollars
A piece of art that does not exist in the physical world was sold at Christie’s auction for $ 69 million: the buyer will not receive a sculpture, nor a painting, not even a copy.
You will receive a digital token (or digital voucher) known as an NFT.
If bitcoin was hailed as the digital answer to currencies, NFTs are now considered the digital answer to collectibles.
But there are many skeptics who consider that it is a new bubble about to burst.
What is an NFT?
NFT stands for Non-fungible Token.
In economics, a fungible asset is something with units that can be easily exchanged, such as money.
With money, one can exchange a 10 peso bill for two five pesos and it will have the same value.
However, if something is not fungible, that is impossible: it means that it has unique properties, so it cannot be exchanged.
It could be a house, or a work of art like the Mona Lisa, which is unique. One could take a photograph of the painting or buy a copy but only one original painting will exist.
“If you take a photo of the original painting, with the best possible camera, and then use the best painter to reproduce it accurately, it is very likely that it will be perfect, but it will never be Leonardo da Vinci’s,” the investor explained to BBC Mundo American Pablo Rodríguez-Fraile, who sold for US $ 6 million a video that can be seen free and whose story we tell here:
NFTs are an “inimitable” asset in the digital world that can be bought and sold like any other type of property, but they have no tangible form in themselves.
These digital tokens can be understood as certificates of ownership of virtual or physical assets.
How do they work?
Traditional works of art like paintings are valuable because they are unique. But digital files can easily be duplicated over and over again.
With NFTs, art can be tokenized to create a digital certificate of ownership that can be bought and sold. As with cryptocurrencies, a record of who owns what is stored in a shared ledger such as the blockchain.
The records cannot be falsified because the book in question is maintained by thousands of computers around the world.
NFTs can also contain smart contracts that could provide the artist with, for example, a portion of a future token sale.
What stops people from copying digital art?
Nothing. Millions of people have seen the $ 69 million piece of art by artist Mike Winkelmann, known as Beeple, and the image has been copied and shared countless times.
In many cases, the artist even retains the copyright to their work, so that they can continue to produce and sell copies.
But the NFT buyer owns a token that proves that he is the owner of the “original” work.
Some people liken it to buying a signed copy.
Are people paying millions of dollars for tokens?
Yes. It’s as far-fetched as it sounds.
How much are NFTs valued at?
In theory, anyone can tokenize their work to sell it as an NFT but interest has grown in the wake of news of multi-million dollar sales.
On February 19, a Gif of Nyan Cat, the famous 2011 meme of a cat with a cookie body flying, sold for more than $ 500,000.
A few weeks later, Canadian singer Grimes sold a collection of digital works for more than $ 6 million.
But it’s not just art being sold through NFTs.
Twitter founder Jack Dorsey sold his first tweet on the social network for $ 2.9 million.
And the auction for Beeple’s piece, the first digital art ever offered at Christie’s, reached a new record for digital art.
But as with cryptocurrencies, there are concerns about the environmental impact of maintaining the blockchain.
Is it just a bubble?
A day before the auction, Beeple told the BBC: “I actually think there will be a bubble, to be honest.”
“And I think we can be in that bubble right now.”
Others are even much more skeptical.
David Gerard, author of Attack of the 50-foot Blockchain, stated that he viewed NFTs as buying “official collectibles.”
“There are some artists making money from these things … but you probably won’t make it,” he warned.
In his opinion, the people who are selling NFT are “crypto scammers”.
“The same guys who have always been doing it, trying to find a new kind of worthless magic nugget that they can sell for money.”
Charles Allsopp, who worked as an auctioneer for the Christie’s house, felt that the concept of buying NFT did not make “any sense.”
“The idea of buying something that is not there is just weird,” he told the BBC.
“I think the people who invest in it are a bit silly, but I hope they don’t lose their money.”
Now you can receive notifications from BBC Mundo. Download the new version of our app and activate them so you don’t miss out on our best content.
BBC-NEWS-SRC: https://www.bbc.com/mundo/noticias-56502251, IMPORTING DATE: 2021-03-24 01:50:05