Spilling The NFT.

Blockchain, which faithful readers will recall is the use of a decentralized public ledger to store data, has enabled some interesting developments in the world of technology. Cryptocurrency being the most famous example of this, of course. Seeing a continued gain in popularity however is something called NFTs, with some examples of such trading for tens of millions of dollars. But what even is an NFT, and how would you sound well-informed about one when the subject came up at a party? Never fear, party animals. I’ve got your back.

NFT stands for non-fungible token. “Fungible” isn’t a word which we use very often, but it’s used to describe something which is replaceable with another identical item of the same type. Money for example is fungible; if you traded a $20 bill for another $20 bill, you’d not have won or lost anything - the bills are functionally interchangeable. If you had an original signed painting let’s say, that’s an example of something which is unique and couldn’t be replaced with an identical version. This painting could be described as non-fungible, as it has a unique quality which isn’t interchangeable.

The benefit of using NFTs is that they are verifiable and not easily duplicated, so we can use them to show irrefutable ownership of things. They actually exist as part of the Ethereum blockchain, which we know as a fairly popular cryptocurrency, but the blockchain it uses also supports the extra information required to make NFTs work. Having this ownership information recorded in such a way means it’s protected from unauthorized change or modification. When we talk about turning a digital item such as a photograph of my cat into an NFT, its uniqueness is logged. This means it can never be altered or replaced with a similar version, as it would no longer authenticate against the blockchain.

Are these things just good for buying cat photos, then? That actually barely scratches behind the ears. It’s true the application which has seen the most traction so far has been digital assets. Artwork, music, videos and the like have all seen inarguably large sums of money change hands in order to claim ownership. An NFT representing a collage of drawings by digital artist Mike “Beeple” Winkelmann sold last year at Christie’s, the 250+ year old auction house. It was the first time a purely digital piece of art was sold there, and the winning bid was an eye-watering $69 million. It’ll likely stand as one of the most prominent legitimizing forces for NFTs as a concept for eternity, and it’s put Winkelmann amongst the top three most valuable living artists.

Couldn’t a person simply avoid the huge outlays of money and screenshot such a thing though? Wouldn’t you get just as much enjoyment out of a copy-pasted version? That certainly is an argument, and fuels how ridiculously some individuals view NFTs. For me it helps to view it in the context of physical pieces of artwork. You can for a few dollars buy a decent quality print of a famous painting. Someone who draws joy from owning the original of something, be that paintings or photos or baseball cards or cars, would be the audience for purchasing NFTs.

What about using these tokens to prove ownership of real-world items? We’re moving in that direction, as it happens. Real estate is poised to be the next big application for this technology. With seamless digital transactions and instantly verifiable proof of ownership, it’s arguably a shoe in. Best of all though? You’re now poised to wow your fellow partygoers with your vast knowledge of all things NFT! Get out there and prove how non-fungible your invite was.

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Richard Noble is the founder of Want For Tech, an IT company based in Glasgow.