Everywhere you’ve gone on the internet this year, talk of NFTs has been inevitable. TikTok to Twitter to Tumblr or any other app starting with the letter ‘T’. But the three letter acronym isn’t as commonly understood as the internet suggests. Many internet goers understand an NFT as an image with a price tag, but that isn’t exactly it. The nature of an NFT is much more complex than a photo of a monkey with a cool hat.
What Does ‘NFT’ Mean?
NFT stands for “non-fungible token”. Non-fungible means something unique and individual; something that cannot be swapped for another. This is unlike the cryptocurrency Bitcoin, which is fungible as it can be replaced with exactly the same thing. The token refers to an image, audio recording, or really any digital file.
Since an NFT can be pretty much anything digital, it can be housed on blockchains. Blockchains are essentially a public ledger on a network, or in simpler terms, it’s a way to record information such as transactions in a way that is hard to tamper with. NFT’s are housed on the Ethereum blockchain, which is both a platform and a cryptocurrency.
What’s the Point?
The main selling point of NFT’s is how easy it is to buy and sell digital content. It seems akin to being an art collector, with the prices to match. Many NFT’s sell for thousands to millions of dollars depending on the subject matter. Former Twitter CEO Jack Dorsey even sold one of his own tweets as an NFT for $2.9 million dollars.
An NFT can even be a digital representation of a physical object. This is used to help streamline the process of buying and selling.
Owning an NFT is also like owning an original work. Say you own the Mona Lisa itself, but there are many copies made of it in order to do something such as sell merch. You could then say you have the original, with a verified receipt to go with it. You can own an NFT as well as being verified to own it, but it won’t prevent others from screenshotting it. It seems as if Twitter is trying to verify those who own NFT’s by allowing users to use their NFT as a profile picture with a special hexagonal border to signal that a single twitter use owns that NFT.
What’s the Downside?
The main problem with NFT’s is how bad they are for the environment. Many websites that are huge in the NFT business use the cryptocurrency Ethereum, which is built on a little something called “proof of work.” Proof of work is a system that works as a security system to cryptocurrencies to prevent fraud. In order for the security system to work, puzzles are put in place as a sort of lock. These puzzles are solved on huge machines that suck up entire cities worth of energy. These puzzles add more to the blockchain and the cryptocurrency is received as a reward.
Therefore, when one buys or sells an NFT, they are in part responsible for the gas emissions released into the air through mass energy consumption. Bitcoin, another cryptocurrency, uses as much energy as the country Poland.
Another downside to an NFT, is the huge problem of art theft. Though there is a way to verify that you own a certain NFT, there is no way to fully verify that the artwork used to make an NFT is yours. Art from many online artists could have been and have had art stolen from them and turned in NFT’s without their permission. Many websites are trying to take action in order to prevent this art theft.