{"id":1306,"date":"2021-09-14T11:47:08","date_gmt":"2021-09-14T16:47:08","guid":{"rendered":"https:\/\/singularityumexicosummit.com\/?p=1306"},"modified":"2021-09-14T11:47:08","modified_gmt":"2021-09-14T16:47:08","slug":"nfts-explained-what-they-are-and-why-theyre-selling-for-millions-of-dollars","status":"publish","type":"post","link":"https:\/\/singularityumexico.com\/en\/nfts-explained-what-they-are-and-why-theyre-selling-for-millions-of-dollars\/","title":{"rendered":"NFTs Explained: What They Are and Why They\u2019re Selling for Millions of Dollars"},"content":{"rendered":"

A couple of days ago, the musician Grimes sold some animations<\/a> she made with her brother Mac on a website called Nifty Gateway. Some were one-offs, while others were limited editions of a few hundred\u2014and all were snapped up <\/a>in about 20 minutes, with total takings of more than $6 million.<\/p>\n\n\n\n

Despite the steep price tag, anybody can watch or (with a simple right-click) save a copy of the videos, which show a cherub ascending over Mars<\/a>, Earth<\/a>, and imaginary landscapes<\/a>. Rather than a copy of the files themselves, the eager buyers received a special kind of tradable certificate called a \u201cnon-fungible token\u201d or NFT. But what they were really paying for was an aura of authenticity\u2014and the ability to one day sell that aura of authenticity to somebody else.<\/p>\n\n\n\n

NFTs are a cultural answer to creating technical scarcity on the internet, and they allow new types of digital goods. They are making inroads into the realms of high art<\/a>, rock music,<\/a> and even new mass-markets of virtual NBA trading cards<\/a>. In the process, they are also making certain people rich<\/a>.<\/p>\n\n\n\n

How NFTs Work<\/h3>\n\n\n\n

NFTs are digital certificates that authenticate a claim of ownership to an asset, and allow it to be transferred or sold. The certificates are secured with blockchain<\/a> technology similar to what underpins Bitcoin<\/a> and other cryptocurrencies.<\/p>\n\n\n\n

A blockchain is a decentralized alternative to a central database<\/a>. Blockchains usually store information in encrypted form across a peer-to-peer network, which makes them very difficult to hack or tamper with. This in turn makes them useful for keeping important records.<\/p>\n\n\n\n

The key difference between NFTs and cryptocurrencies is that currencies allow fungible trade, which means anyone can create Bitcoins that can be exchanged for other Bitcoins. NFTs are by definition non-fungible, and are deployed as individual chains of ownership to track a specific asset. NFTs are designed to uniquely restrict and represent a unique claim on an asset.<\/p>\n\n\n\n

And here\u2019s where things get weird. Often, NFTs are used to claim \u201cownership\u201d of a digital asset that is otherwise completely copiable, pastable, and shareable\u2014such as a movie, JPEG, or other digital file.<\/p>\n\n\n\n

So What Is an Authentic Original Digital Copy?<\/h3>\n\n\n\n

Online, it\u2019s hard to say what authenticity<\/em> and ownership<\/em> really mean. Internet culture and the internet itself have been driven by copying, pasting, and remixing to engender new forms of authentic creative work<\/a>.<\/p>\n\n\n\n

At a technical level, the internet is precisely a system for efficiently and openly<\/a>taking a string of ones and zeros from this<\/em> computer and making them accessible on that<\/em> computer, somewhere else. Content available online is typically what economists call \u201cnon-rivalrous goods<\/a>,\u201d which means that one person watching or sharing or remixing a file doesn\u2019t in any way impede other people from doing the same.<\/p>\n\n\n\n

Constant sharing adds up to a near-infinite array of material to view, share, copy, or remix into something new, creating the economies of abundance<\/a> on which online culture thrives.<\/p>\n\n\n\n

TikTok is built around reimagining common audio loops with seemingly endless but unique accompanying visual rituals<\/a>, which are themselves mimicked in seemingly endless variations. On Twitter, tweets are only valuable to the extent they are retweeted. Fake news only exists<\/em> insofar as Facebook\u2019s algorithm<\/a>decides sharing it will increase engagement via driving more sharing.<\/p>\n\n\n\n

Information Wants to Be Free<\/h3>\n\n\n\n

The life and longevity of digital content has depended on its ability to spread<\/a>. The internet\u2019s pioneering cyber-libertarians had a motto to describe this: information wants to be free<\/a>. Attempts to stop information spreading online have historically required breaking aspects of technology (like encryption)<\/a> or legal regimes<\/a> like copyright.<\/p>\n\n\n\n

NFTs, however, bring code and culture together to create a form of control that doesn\u2019t rely on the law or sabotaging existing systems. They create a unique kind of \u201cauthenticity\u201d in an otherwise shareable world.<\/p>\n\n\n\n

What\u2019s Next?<\/h3>\n\n\n\n

Nearly 40 years ago, Canadian science-fiction writer William Gibson famously described cyberspace as a \u201cconsensual hallucination<\/a>\u201d in which billions of users agreed that the online world was real. NFTs take this to the next level: they\u2019re a consensual hallucination that this<\/em> string of ones and zeros is different and more authentic than that<\/em> (identical) string of ones and zeros.<\/p>\n\n\n\n

NFTs work by reintroducing a mutual hallucination of scarcity into a world of abundance. There is no shortage of buyers: the NFT market is already worth hundreds of millions of dollars. Even humble sports trading cards<\/a> will never be the same.<\/p>\n\n\n\n

Are NFTs Different Enough to Break the Internet?<\/h3>\n\n\n\n

The real function of NFTs is to create a clear delineation between ordinary creators and consumers of online content and those privileged enough to be paid to produce content or claim to own \u201cauthentic\u201d work. The internet decentralized content creation, but NFTs are trying to recentralize the distribution of culture.<\/p>\n\n\n\n

NFTs facilitate the exchange of fungible money for non-fungible authenticity. It\u2019s a well-known move<\/a> that occurs in all sorts of industries, and one with a long history in, well, art history<\/a>.<\/p>\n\n\n\n

How the culture-code of NFTs will evolve is anyone\u2019s guess<\/a>, but at the moment, it is opening a lot of new ways to make new money<\/a> change hands.<\/p>\n\n\n\n

At first take, it might seem that this presents artists everywhere with a recourse to get paid for their otherwise copy-pastable work. Yet creating normative rules around paying for content online has not so far gone smoothly: think of the lackluster payments<\/a> musicians receive from streaming services like Spotify.<\/p>\n\n\n\n

NFTs have also been criticized<\/a> for their profligate energy consumption, because they depend on a lot of computer power to encrypt their tokens. According to the online calculator at CryptoArt<\/a>, the computations required to create NFTs for each of Grimes\u2019 animations would have used enough electricity to boil a kettle 1.5 million times\u2014and resulted in around 70 tons of CO2<\/sub>emissions. I\u2019m not sure that cost for future generations was priced into the current market value, or any appreciation as tokens cryptographically change hands.<\/p>\n\n\n\n

Other than their tons of CO2<\/sub>\u00a0emissions, what\u2019s real about NFTs is how their creation of technical scarcity enables a new cultural agreement about how something can be authentic and who controls that authenticity. NFTs create new forms of hierarchy, power, and exclusion on the wider web. They have already created a new type of haves and have-nots.<\/p>\n\n\n\n

\n\n\n\n

This article is republished from\u00a0<\/em>The Conversation<\/a>\u00a0under a Creative Commons license. Read the\u00a0original article<\/a>.<\/em><\/p>\n\n\n\n

Image Credit:\u00a0Gerd Altmann<\/a>\u00a0from\u00a0Pixabay<\/a><\/em><\/p>\n\n\n\n

Author:<\/strong><\/p>\n\n\n\n

Luke researches what happens when life and the Internet collide. He was awarded a PhD from the University of Melbourne researching radical transparency, democratic governance, and their mediation in the networked terrain of contemporary politics. He is a Research Fellow for the Melbourne Networked Society Institute and teaches at the School of Social and Political Sciences, The University of …\u00a0Learn More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

A couple of days ago, the musician Grimes sold some animations she made with her brother Mac on a website called Nifty Gateway. Some were one-offs, while others were limited editions of a few hundred\u2014and all were snapped up in about 20 minutes, with total takings of more than $6 million. Despite the steep price tag, anybody can watch […]\n","protected":false},"author":1,"featured_media":1307,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","footnotes":""},"categories":[13],"tags":[],"series":[],"class_list":["post-1306","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articulos-ingles"],"episode_featured_image":"https:\/\/singularityumexico.com\/wp-content\/uploads\/2021\/09\/NFT-blockchain-token-2.jpg","episode_player_image":"https:\/\/singularityumexico.com\/wp-content\/uploads\/2023\/05\/11711533-1673157178559-89a95be153719-4-scaled.jpg","download_link":"","player_link":"","audio_player":false,"episode_data":{"playerMode":"dark","subscribeUrls":{"apple_podcasts":{"key":"apple_podcasts","url":"","label":"Apple Podcasts","class":"apple_podcasts","icon":"apple-podcasts.png"},"stitcher":{"key":"stitcher","url":"","label":"Stitcher","class":"stitcher","icon":"stitcher.png"},"google_podcasts":{"key":"google_podcasts","url":"","label":"Google Podcasts","class":"google_podcasts","icon":"google-podcasts.png"},"spotify":{"key":"spotify","url":"","label":"Spotify","class":"spotify","icon":"spotify.png"}},"rssFeedUrl":"https:\/\/singularityumexico.com\/en\/feed\/podcast\/the-feedback-loop-by-singularity","embedCode":"

NFTs Explained: What They Are and Why They\u2019re Selling for Millions of Dollars<\/a><\/blockquote>