Non-Fungible Tokens – new online craze or the future of art?
NFTs are another example of blockchain’s potential to revolutionise the world as we know it. But as with digital currencies, digital art comes at a real-world price.
11 February 2022
By Mariusz Bogacki, Researcher and Science Communicator, Edinburgh
In simplest terms, NFTs – Non-Fungible Tokens – are digital certificates of authenticity. But to understand how they work we need to define the concept of fungibility and the principles of blockchain technology first.
Fungibility refers to ability of an asset to be exchanged of substituted with similar assets of the same value. While fungible basically means interchangeable, non-fungible means non-replaceable. Everything in our economy is fungible or non-fungible, and the non-fungible things are – not surprisingly – more desirable and valuable.
NFTs are therefore original digital creations, or pieces of the internet, that can be verified for their uniqueness and authenticity. Every digital drawing, painting, even Facebook Post or a Tweet, can be turned into an NFT. Of course, each of these digital ‘art pieces’ can be copied and redistributed online. However, with the use of Blockchain technology, NFTs allow us to verify the original ‘artwork’s authenticity.
Blockchain is a way of recording information that makes it difficult or impossible to change, hack or cheat the system. It’s a type of shared database that allows for storing and verifying information between computers. Blockchain is best known for its crucial role in the rise of cryptocurrencies. It allows for maintaining a secure and decentralized record of all transactions made online. The same blockchain technology is applied to confirm authenticity of digital art pieces and products. In other words, blockchain allows NFTs to be verified as authentic, original, digital art pieces.
Just like cryptocurrencies have shaken up the world of finance, the NFTs are now making their way into the mainstream art world. Last year, a famous auction house Christies open up bidding for its first NFT auction. Millions of digital creators are making and selling their digital art pieces at online auction houses independently. Viral memes, GIFs, and even Tweets, are selling out for extortionate amounts of money. Proponents of the technology argue that NFTs empower the digital creators, giving them an ownership of their creation and a way of making money.
Unfortunately, there are also downsides. Not all NFTs are able to verify that the person selling a digital art piece is actually the person who created it. In other words, while the authenticity of an NFT can be confirmed with blockchain technology, the identity of a person selling it, cannot. As a result, online theft and scams are increasingly becoming an issue in the digital art world. Critics also argue that NFTs’ rise in popularity is fuelling a growing market bubble which, if it burst, might harm both the artists and the emerging industry. Most significantly, verifying NFTs requires a lot of computer power and is hugely energy inefficient. The mining factories responsible for processing the high volumes of transactions and verifications increasingly contribute to global warming.
Regardless of its pros and cons, it looks like NFTs are going to be with us for some time. Leaving us all to ponder: why would anyone pay for something that is freely available and accessible with a simple Google search? This perhaps, is a question for digital or crypto philosophers.