When he created the social network Twitter years ago, IT entrepreneur Jack Dorsey decided to test how it worked and posted the first message on it. It reads "I'm just setting up my Twitter." At the end of March 2021, this message was sold for an impressive $ 2.9 million. If you are wondering how it is possible to sell a social network message at all, and more so for an amount equal to the budget of a small company, there is reason to be puzzled. Welcome to the strange world of NFT, or Non-Fungible Token.
This is a concept based on blockchain technology that allows a digital asset to be defined as unique. This can be any kind of
or information - text, photo, picture, musical composition, video, many other forms of art or intellectual property. However, in order for them to be "converted" into NFT, a blockchain platform such as Ethereum or Tezos must be used to certify their uniqueness.
For those unfamiliar, the blockchain is an open, decentralized and completely transparent database through which bitcoin and other cryptocurrencies work, but also many other things. Created along with bitcoin, it quickly exceeded its potential and today is used to track products, create financial systems, manage communities, automate the work of intermediaries of all kinds and even create horizontal companies without leadership, which we have written about in previous issues of Economics magazine.
Digitizing art through NFT is not really a new idea and has existed since 2012. Initially, it was popular mainly among technology enthusiasts and subcultural communities, with the first more popular project - CryptoKitties - being to exchange virtual cats. Curiously, some of them reach a price of $ 100,000, and the total investment in the project reached $ 12.5 million. In recent years, however, NFT has rapidly gained popularity among the general public, and the value of all such assets last year reached $ 250 million. This is practically a tripling of this indicator in one year.
A number of large companies are already looking at this new segment. Among them is American sporting goods icon Nike, which has created its own system called CryptoKicks, which uses NFT technology to authenticate sneakers and create digital copies of them. Other large corporations such as Atari and Liquid Media Group are also actively considering joining the emerging sector. High-risk investors in the United States have gone crazy and leading names among them such as Andreessen Horowitz and Accel have already secured stakes in promising startups for the sale of assets in the form of Non-Fungible Tokens.
Revolution in art
The cultural sector seems to be among the most affected by the new digital wave. Last February, the eccentric musician Grimes, who is also the wife of billionaire Elon Musk, sold her work for about $ 6 million. The digital artist Beeple performed significantly better, selling its popular collage "Everydays: the First 5000 Days" in March for an impressive $ 69.3 million. This was also the first auction of an NFT work at the popular Christie's auction house.
Currently, the number of artists selling paintings, photography and other fine arts, as well as music in the form of NFT, is already in the thousands. Gotham's list of the most expensive art sales digitized by this blockchain technology includes names such as Trevor Jones, Fewocious, Hackatao and the mysterious PAK, whose identity is unknown but still has been selling digital art in one form or another for two decades. Among his fans are many technology entrepreneurs, including Elon Musk himself.
The change is huge for artists, many of whom are used to making a living by selling their work to a limited audience at local galleries or just on the street. The advent of the internet has changed many things for them, allowing them to make websites as well as sell in online art stores. But the really big change comes with NFT, which will make it easier for them to monetize their creations by digitizing them. Even more curious is how this technological concept not only stimulates the development of traditional culture, but also creates entirely
of art. Such is the case with Jack Dorsey's Twitter message, which through NFT has become a digital object with collector's value. Or with the popular gif-animation Nyan Cat, which for many years was just an internet meme, until at the end of February its original version was sold as a "non-fungible token" for $ 600,000. The genie of the bottle of creativity seems to have been released and today virtually any artist, photographer or enthusiast can create a work of art that becomes a hit on online digital art platforms.
In essence, art, like money, has always been more or less virtual. That's why blockchain technology has entered these two segments so quickly. And while they look very different, the first cryptocurrency, bitcoin, and the sale of digital art, have a lot in common - they both use blockchain as a form of authentication.
No wonder, then, that both ideas were first embraced by the same technological community before being looked at by large companies, institutions, and society at large. Today it is clear that the digitalization of assets through NFT is the second major application of blockchain and the second major example of the capabilities of this technology, after cryptocurrencies. And since we already have this example, almost all the restrictions before it are removed and it is not an exaggeration to say that there is no upper limit to its development.