Non-Fungible Tokens (NFT) are exploding in popularity. For example, Jack Dorsey (Co-Founder and CEO of Twitter) offered his 1st tweet as an NFT and the current high bid is $2.5 million. There are other artists who are also making exorbitant sums on this new means of digital distribution. Even the NBA has gotten involved selling highlights of popular pays for high dollar values. So, what exactly is a an NFT?
Non-fungible simply means that you can’t exchange it for another thing of equal value. And token could be a tweet, image, video or other digital canvas. For those who grew up trading sports cards, you will quickly understand the high level concept behind an NFT. However, there is a key difference, an NFT is much more like getting the player’s autograph on the card and that player agreeing to never autograph a similar card.
Within the sports realm, this would be incredibly rare. Sports card companies certainly make limited editions of popular players. However, players would never agree to only autograph one sports card for their entire career. There are also many comparisons to the art world. For certain paintings, they are rare because there was only ever one of them produced.
This often begs the question, well if its digital art, why can’t I just make a whole bunch of copies using existing technology. In this case, this is where the blockchain comes in and why NFT are even able to accomplish this scarcity. With blockchain technology, you know without a doubt which piece of digital art is the true and only original work because it will have a unique cryptographic signature associated with it.
So, while people could record the highlight video or take a picture, it still retains its value since you haven’t changed the nature of the original work. In essence, you don’t dilute the value of the Mona Lisa simply because you took a picture of it on your digital camera. The value comes from the fact that there is only an original made by the artist.
When you think about the emerging generation of kids, they are growing up right as this technology is developing. Similar to kids who grew up as sports cards were popularized, there are going to be some great opportunities to collect rare pieces of digital art. While there are some digital art pieces there are selling for thousands, tens of thousands, hundreds of thousands and even millions of dollars, it is not guaranteed that these pieces will be the most valuable going forward.
In many ways, those who are currently most attuned to digital culture will have the best understanding of what may be valuable going forward. This may also be digital art that is created by kids. However, the most important thing is for kids to begin studying and learning more about the potential by engaging with this emerging trend early not to make money. But, instead to learn about the new and different ways that technology innovation is impacting disciplines and areas that was previously not considered or assumed to be off limits.