In recent weeks, NFT has made headlines in the media around the world, and become the most discussed thing on the internet. What, how, and why? Let’s try to understand how the NFT works, why it has such a considerable value, and look at a few cases which boomed the NFT market.
NFT stands for “non-fungible token” and to understand its meaning, one should know what the “fungible” one is. Fungible goods are material items that can be exchanged and still have the same value (for example, one ounce of gold may be traded to another ounce without losing its worth). In contrast, non-fungible assets cannot be replaced or traded. Non-fungibility stands for assets that are one of a kind, unique (like real estate or pieces of art), and are based on blockchains. The most popular types of NFTs are gifs, jpegs, videos, messages, etc.
To ease your way of mastering the digital art world, let us explain how exactly NFTs work. The idea of selling something anyone can get for free from the internet is the main concept of NFT. When a person becomes the owner of the token, they become the owner of a valuable and authentic item even though they cannot physically touch it. Let us take a look at a few examples. CryptoPunks characters – one of the quirky art assets anyone can buy with NFTs. The lowest price of one CryptoPunk today is 21.97 ETH (USD 57,526.03). The collection of 10,000 characters uses ERC-721 standard and each of them has random accessories, appearance, and features. The developers of the project became the initiators of the CryptoArt movement and created the “ground” for today’s NFT market. Anyone can copy or save the CryptoPunk image but only one person can be the legal owner of the artwork. The recorded code of each work is stored in the blockchain which makes it incorruptible. Hence, the owner can check and track the documentation, be sure that their CryptoPunk isn’t stolen, and have protection against copyright infringement. Matt Hall and John Watkinson, the developers of the CryptoPunk system, compare it to owning a piece of art in the real world that’s permanently on loan to a public museum. This provides digital artists with the ability to validate their creations and earn money.
Another interesting case is the digital artist known as Beeple, who became insanely famous after selling his work “Everyday: 5000 Days” at Christie’s auction for $69 million. Beeple, aka Mike Winkelmann, was posting his own digital artwork every day for 13 years; the collage of these images was sold as the most expensive NFT ever sold on the auction. Christie’s, a 225-year-old auction house, previously sold only physical art but auctioned the entirely digital Beeple. Blockchain technology provides both artists and collectors with an opportunity to verify the authenticity of the masterpiece, and this makes a big difference between the physical and digital pieces of art.
A Ukrainian supermarket chain has also decided to enter the crypto market. On April 16, Silpo supermarket posted images of products from the counter as non-fungible tokens on the OpenSea, peer-to-peer marketplace where people can discover rare digital items. Everyone can buy a picture of their flagship buckwheat baguette, candy, eggs, or bubble wine and become the owner of the unique piece of digital art protected by and stored in blockchain. This example proves that anything can become NFT, creating new ownership concepts on the market.
The world of digital art has expanded massively after the advent and growing popularity of non-fungible tokens. If you are intrigued by the NFT concept as much as we are, check out OpenSea or Rarible marketplaces to look through art collections and buy an asset. Who knows, maybe one day IT Arena will launch its own NFT too.