A digital-only artwork has sold at Christie’s auction house for an eye-watering $69m (\u00a350m) – but the winning bidder will not receive a sculpture, painting or even a print.<\/p>\n\n\n\n
Instead, they get a unique digital token known as an NFT.<\/p>\n\n\n\n
Where Bitcoin was hailed as the digital answer to currency, NFTs are now being touted as the digital answer to collectables.<\/p>\n\n\n\n
But there are plenty of sceptics who think it is all a bubble that is going to burst.<\/p>\n\n\n\n
What is an NFT?
\nNFT stands for non-fungible token.<\/p>\n\n\n\n
In economics, a fungible asset is something with units that can be readily interchanged – like money.<\/p>\n\n\n\n
With money, you can swap a \u00a310 note for two \u00a35 notes and it will have the same value.<\/p>\n\n\n\n
However, if something is non-fungible, this is impossible – it means it has unique properties so it cannot be interchanged with something else.<\/p>\n\n\n\n
It could be a house, or a painting such as the Mona Lisa, which is one of a kind. You can take a photo of the painting or buy a print but there will only ever be the one original painting.<\/p>\n\n\n\n
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own.<\/p>\n\n\n\n
The digital tokens can be thought of as certificates of ownership for virtual or physical assets.<\/p>\n\n\n\n
How do NFTs work?
\nTraditional works of art such as paintings are valuable because they are one of a kind.<\/p>\n\n\n\n
But digital files can be easily and endlessly duplicated.<\/p>\n\n\n\n
With NFTs, artwork can be “tokenised” to create a digital certificate of ownership that can be bought and sold.<\/p>\n\n\n\n
As with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain.<\/p>\n\n\n\n
The records cannot be forged because the ledger is maintained by thousands of computers around the world.<\/p>\n\n\n\n
NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.<\/p>\n\n\n\n
What’s stopping people copying the digital art?
\nNothing. Millions of people have seen Beeple’s art that sold for $69m and the image has been copied and shared countless times.<\/p>\n\n\n\n
In many cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies.<\/p>\n\n\n\n
But the buyer of the NFT owns a “token” that proves they own the “original” work.<\/p>\n\n\n\n
Some people compare it to buying an autographed print.<\/p>\n\n\n\n
People are paying millions of dollars for tokens?
\nYes. It’s as wild as it sounds.<\/p>\n\n\n\n
How much are NFTs worth?
\nIn theory, anybody can tokenise their work to sell as an NFT but interest has been fuelled by recent headlines of multi-million-dollar sales.<\/p>\n\n\n\n
On 19 February, an animated Gif of Nyan Cat – a 2011 meme of a flying pop-tart cat – sold for more than $500,000.<\/p>\n\n\n\n
A few weeks later, musician Grimes sold some of her digital art for more than $6m.<\/p>\n\n\n\n
It is not just art that is tokenised and sold. Twitter’s founder Jack Dorsey has promoted an NFT of the first-ever tweet, with bids hitting $2.5m.<\/p>\n\n\n\n
Christie’s sale of an NFT by digital artist Beeple for $69m (\u00a350m) set a new record for digital art.<\/p>\n\n\n\n
But as with crypto-currencies, there are concerns about the environmental impact of maintaining the blockchain.<\/p>\n\n\n\n
Is this just a bubble?
\nA day before his record-breaking auction, Beeple – whose real name is Mike Winkelmann – told the BBC: “I actually do think there will be a bubble, to be quite honest.<\/p>\n\n\n\n
“And I think we could be in that bubble right now.”<\/p>\n\n\n\n
Many are even more sceptical.<\/p>\n\n\n\n
David Gerard, author of Attack of the 50-foot Blockchain, said he saw NFTs as buying “official collectables”, similar to trading cards.<\/p>\n\n\n\n
“There are some artists absolutely making bank on this stuff\u2026 it’s just that you probably won’t,” he warned.<\/p>\n\n\n\n
The people actually selling the NFTs are “crypto-grifters”, he said.<\/p>\n\n\n\n
“The same guys who’ve always been at it, trying to come up with a new form of worthless magic bean that they can sell for money.”<\/p>\n\n\n\n
Former Christie’s auctioneer Charles Allsopp said the concept of buying NFTs made “no sense”.<\/p>\n\n\n\n
“The idea of buying something which isn’t there is just strange,” he told the BBC.<\/p>\n\n\n\n
“I think people who invest in it are slight mugs, but I hope they don’t lose their money.”<\/p>\n","protected":false},"excerpt":{"rendered":"
A digital-only artwork has sold at Christie’s auction house for an eye-watering $69m (\u00a350m) – but the winning bidder will not receive a sculpture, painting or even a print. Instead, they get a unique digital token known as an NFT. Where Bitcoin was hailed as the digital answer to currency, NFTs are now being touted … Continue reading “What are NFTs and why are some worth millions?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3205","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/posts\/3205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/comments?post=3205"}],"version-history":[{"count":1,"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/posts\/3205\/revisions"}],"predecessor-version":[{"id":3206,"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/posts\/3205\/revisions\/3206"}],"wp:attachment":[{"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/media?parent=3205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/categories?post=3205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tech-battery.com\/batteriesblog\/wp-json\/wp\/v2\/tags?post=3205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}