Sunday, December 4

Beyond digital art: this is how NFTs can change the way we consume

Do you want to have Leonardo da Vinci’s Gioconda painting in your living room? If we are talking about the original, the Louvre museum will surely make it difficult for you, but if you settle for a copy, you can buy online for less than ten euros. On the other hand, if it works for you to have da Vinci’s painting as your wallpaper, it won’t cost you anything.

It is a distinction that everyone can understand. The value of the original is incalculable, while the value of a digital copy is practically zero, because on the Internet it is possible to make infinite copies. But what happens when there is no original that you can play?

Today many artists create their works directly on a screen, without the need for paint or canvas. In this case, the original work is indistinguishable from the copy, and according to the previous logic, the original would not be worth anything either. And yet, the creativity, talent, and effort of the creator do have value.

But in order to give it to him, it would be necessary to distinguish the original of the work of art from a copy. This is precisely what NFTs are for.

What are NFTs

A non-fungible token (non-fungible token, NFT, for its acronym in English) is a cryptographic object, that is, an encrypted record in a database. NFTs use blockchain, the same technology as Bitcoin and other cryptocurrencies.

Blockchain is similar to a distributed ledger on thousands of computers where, for example, Bitcoin transactions are recorded. Since the entries are encrypted and it is not known exactly where they are stored, it is almost impossible to spoof. Using the same technique, it is possible to certify which copy of an image is the original, and distinguish it from later copies.

This is achieved by a smart contracts or smart contract, a file stored on the blockchain that identifies one of the infinite copies as the original. This “digital original” is unique, proprietary, and can be bought and sold.

In addition, it is also possible to have a record of each time a copy is made. This means that if you are the author of a digital painting, every time it is published on a web page (which is equivalent to making a copy) there will be a record, and you could request a payment for its use. As the NFTs have the contract embedded, this payment can also be recorded on the blockchain, in cryptocurrencies, automatically.

The NFT Bubble

It’s easy to understand why this is revolutionary. Suddenly a digital work, previously worthless against its copies, becomes an asset and source of income for the artist, collector or investor. The same applies to the musician, the journalist, the photographer or the creator of video games. And this is just the beginning. There are already examples of NFTs in action.

In October 2021, an artist named Mike Winkelmann, going by the pseudonym Beeple, auctioned a digital work at the famous Christie’s for $69 million. Until then, the most Winkelmann had ever gotten for his prints was $100.

In 2017, the Larva Labs studio, founded by Canadians Matt Hall and John Watkinson, released a collection of 10,000 digital “stickers” called CryptoPunks. These are images of different characters in low resolution. But on February 13 this year, the CryptoPunk #5822 was sold for 8,000 ETH, which is equivalent to about $23.7 million at the time of sale. The buyer is Deepak Thapliyal, the CEO of a blockchain services company.

What will remain after the explosion

Why is NFT being speculated in this way? As with Bitcoin, the bubble forms when there is a promise of something that can be revolutionary and the expectation of a great reward for being the first to invest.

Like all bubbles this madness will end and only reasonable uses of technology will survive, which may progress to become a regular part of our lives.

There are many signs that the fever is already passing. Twitter founder Jack Dorsey’s first tweet was sold as an NFT for $2.9 million last year. This year, the resale of it did not exceed 14,000 dollars. The rapper Snoop Dogg’s NFT, Auctioned for more than $25 million, it recently received an offer of just $210.

Many people interpret this as a “cleansing” of the market, which is removing NFTs that were worthless to begin with. What applications of NFTs will pass into our daily lives? These are some examples:

  • Tickets to events and shows: NFTs already make it possible to issue, purchase and trade virtual tickets to events, whether live or online. The ticket and its value are registered on the blockchain and can be resold or auctioned.
  • collectibles: Similar to trading card collections, but in digital format, they may very well continue. Last year, an NFT card of a photo of a LeBron James dunk in NBA Top Shot sold for $208,000.
  • Metaverse and video games: NFTs can also be used to represent assets in video games and in virtual worlds (such as Mark Zuckerberg’s Meta project). For example a virtual piece of land, a castle or a weapon, which are owned by the player and can be bought and sold.
  • Music: This technology allows musicians to publish their work as unique NFTs, in limited editions, as if they were virtual “vinyls”, and thus monetize their use. NFTs have saved many musicians during the pandemic, when concerts, currently their main source of income, were suspended.
  • Sports– In addition to the obvious applications like game tickets or collectibles, famous athletes are using NFTs to earn more revenue from their image. For example, NBA player Spencer Dinwiddie has converted his contract to NFT so fans can invest in him.
  • Digital art: The current bubble and its bursting will not end the digital art market, and it is to be hoped that very soon artists will be able to use NFTs to keep track of the use of their work. From there until they start receiving the money, it can take a little longer.
  • Elections: If NFTs are used as virtual ballot papers, it would be possible to have an electoral system in which fraud is almost impossible and the count is instantaneous. The same would apply to medical records and other sensitive personal information.

The technology for these potential uses of NFTs already exists, it is only necessary to adapt the current systems and, above all, the will to make these changes a reality.

If you don’t want to miss any of our articles, subscribe to our newsletters