Earlier this year, non-fungible tokens, or NFTs, took the internet by storm, creating a huge following of people who have elevated the value of some NFTs to millions of dollars.
So what is an NFT? In computer talk, an NFT is a unit of data that is stored in a digital blockchain. In simpler terms, an NFT is a piece of digital media, be it an image, video, audio file or a GIF.
Think about those highly valuable, collectible baseball cards that are worth millions of dollars. NFTs are similar in the way they are being collected and resold. The great game changer with NFTs is that everyone can make their own, creating huge potential for digital art.
When people buy NFTs, they are not only buying images, audio files, GIFs or videos, but also the certificates of ownership, which are recorded on the digital blockchains where the actual items are stored. As opposed to owning a physical piece of art, owning an NFT means owning a digital certificate of authenticity.
A great example of NFTs would be CryptoPunks, released in 2017. CryptoPunks were among the first NFTs ever created. They are computer-generated pixel art characters. Like all NFTs, each punk is unique and worth a lot of money. According to Larva Labs, which is the company that created these NFTs, the most expensive CryptoPunks are selling for over $7 million.
Twitter founder and CEO Jack Dorsey recently sold the first Tweet ever written. Dorsey created the tweet on March 21, 2006, and sold it as an NFT on March 22, 2021, for $2.9 million. The tweet simply reads “Just setting up my twttr.”
So what does “non-fungible” actually mean? If something is non-fungible, it simply means it’s unique or one of a kind. This means no two NFTs have the same value. Cryptocurrencies such as bitcoins, on the other hand, are different from NFTs in that they are fungible tokens, meaning they are interchangeable and are all of equal value.
The idea of NFTs may seem difficult to understand, and simply knowing the textbook definition is barely enough to answer every question that arises after reading about them. The thing is, anyone can make NFTs, which is why their market value is increasing so quickly.
According to the 2020 NFT yearly report published by nonfungible.com, NFT trade volume quadrupled in one year to over $250 million in 2020. Many outlets are estimating that NFT worth will only continue to go up.
Jackie Ni, 18, is a college student who co-founded the website, Drumpfs. Ni, alongside Theodore Horn, 20, and Jason Yu created NFTs out of former president Donald Trump’s tweets and are selling them on their website.
“Trump’s tweets are really perfect as NFTs because they are limited. There’s never going to be more because he’s banned,” Ni said. “A lot of them are really funny and memorable.”
Right now, most of these Trump tweet NFTs sell for about $80, but the most popular and retweeted ones can sell for thousands. According to Ni, 97% of the profits go to charities that Trump hates.
“When you buy a tweet, all proceeds from that will go toward a charity that the tweet was about, so if it’s about the so-called “Chinese virus,” the proceeds would go toward the Asian Mental Health Collective,” Ni said.
NFTs are not without controversy. There are many environmental concerns related to NFTs. Much like cryptocurrency, NFT transactions consume large amounts of electricity. This results in an increase in CO2 emissions that is extremely costly to our environment.
According to a 2018 study published in Nature Climate Change, Bitcoin technology and the CO2 emissions it generates, could cause earth’s temperatures to rise by 2 degrees C over the next three decades.
There is no guarantee that NFTs will forever remain as valuable as they are today, but at the moment, many entrepreneurs and young artists are taking advantage of the market to make large sums of money off their work.