NFTs use cryptocurrency (blockchain) technology to register digital works sold on the Internet for millions of dollars.
One of the first NFT transactions took place in March, when Jack Dorsey, CEO of Twitter, sold an image of the first tweet for $2.9 million.
In the virtual world, assets don’t have to be tangible to be worth money and have interested parties willing to pay millions for them. Cryptocurrencies have kicked off. Next are NFT, whose acronym stands for non-fungible token.
We can translate non-fungible token as “non-fungible token,” non-fungible being something that is not replaceable. At the base of an NFT is a computer file, mostly an image file, but it can be of almost any type (music, a recipe, among others).
This file is then registered on a blockchain, becoming a “unique” file, in the sense that it is possible to see when it was created, who owns it, and who previously owned it. The registration of the NFT on the blockchain is like a digital certificate of authenticity.
Most NFTs are registered on the Ethereum blockchain, the second most valuable cryptocurrency and which we have highlighted as one of the most sophisticated and interesting for its possibilities.
One of the first NFT transactions occurred in March, when Jack Dorsey, CEO of Twitter, sold an image of the first tweet for $2.9 million through the Valuables website. It simply said, “Just setting up my twttr,” and it had been 15 years since he launched the social network on March 22, 2006.
Sina Estavi, a Malaysian entrepreneur, justified the purchase of this NFT this way: “It’s a piece of human history in the form of a digital asset. Who knows what the price of the first tweet in human history will be 50 years from now?”
The values associated with this and many other sales are drawing attention. Is this a new way of making and acquiring art, or just another “crypto craze”? One doesn’t know.
How to buy or sell an NFT
First, you need to have a cryptocurrency wallet that allows you to transact Ethereum (most do).
Then, create an account on one of the specialized sites where you want to put up for sale or buy NFT. There are several, and with the hype surrounding the phenomenon, there will probably be many more popping up. Some examples are Rarible and OpenSea (accessible to all users and all types of NFT), Nifty Gateway and SuperRare (more art-oriented), and a variety of niche sites like Cryptopunks (sells small algorithmically generated images of punks) or SoRare (digital soccer stickers).
Connect your wallet to your account on the NFT site and load it with the amount of cryptocurrency you want to spend.
You are now ready to bid on the desired NFT.
If you want to create and sell an NFT, you need to have the image, music or other file in a format accepted by the site you are using (JPEG, GIF, MP3, among others).
Upload the file to the site, pay the commissions, and choose a bid price.
Now you just have to wait and see if you get interested in buying it.
Blockchain at the service of digital art
The concept of scarcity of a digital asset is something that is strange at first. Because if you can have as many copies of a file as you want, why should it have any value? But is it really so different from art or other collectibles in the real world? It is true that the original file, be it a video, a song or a drawing can be copied infinitely. But in real life, it is also possible to replicate the Mona Lisa, even if imperfectly (by the paints used, by the wear and tear of time). Aren’t the similarities greater than the differences?
As society becomes more and more digital, it is natural that art becomes more and more virtual, and in this case, a system is needed to attest to authenticity. So NFTs, perhaps more than cryptocurrencies, are using blockchain to meet a real need.
The usefulness of NFT for artists to content holders, in general, is obvious. They can monetize, that is, make their work more direct, because they avoid intermediaries and have more control.
NFTs allow, for example, programming that the creator will receive a percentage of sales. The artworld is already paying attention.
The most expensive NFT sale on record, the image First 5000 Days, by artist Beeple, which sold for more than $69 million, was sanctioned by the prestigious auction house Christie’s. In music, the well-known DJ Steve Aoki sold for almost $900,000 one of his songs, associated with a video on the Nifty Gateway website.
But it is not only the art world that can benefit from NTFs. The American basketball league, NBA, in partnership with Dapper Labs, has created a blockchain platform called Top Shot Moments, aimed at trading digital collectibles. In practice, it trades virtual “geeks,” that is, animated images of fantastic plays by famous players. The rarest ones are being sold for hundreds of thousands of dollars, such as the LeBron James top shot, which earned $387,600. In February, this platform made almost $38 million in just 24 hours.
Recent Big Moves in the Audio Industry, possibly related to NFTs
The mobile payment platform Square, headed by Jack Dorsey, founder, and CEO of Twitter, announced on Thursday the acquisition of a majority stake in Tidal, a music streaming service owned by rapper Jay-Z and other artists such as Beyoncé and Rihanna.
Square will pay $297 million for the stake in the deal, in company stock and cash. The deal also provides for Jay-Z to join Square’s board.
Dorsey’s company is responsible for the popular financial app Cash App, which is widely used in the US. Square recently claimed to have acquired 3,318 bitcoins, which is in addition to 4,709 that the company acquired in October 2020 at a price of $50 million. Dorsey is a well-known bitcoin supporter and with the purchase has diversified the company’s investments.
Jay-Z and Dorsey recently also announced the creation of a fund with 500 bitcoins to finance cryptocurrency-related initiatives in Africa.
Tidal, on the other hand, was born in 2014 to compete in streaming with the promise of delivering superior audio. That feature is something that Swedish giant Spotify only announced it would make available this year. The service was purchased by Jay-Z in 2015.
Unlike Spotify, Tidal does not have a free mode and operated solely on a subscription basis – something unusual for the time it was launched, when music downloads were more common than today.
The purchase comes at a hot time for the streaming audio market, with the popularity of podcasts – a niche well explored by Spotify. Recently, the company announced a mega expansion, bringing the service to 80 new countries in 26 additional languages.