12 avril 2022
What is an NFT?
To better understand the notion of Non-Fungible Token, it is enough to look at the real world: a unique and non-replaceable token could be here for example a painting or a personalized and custom-made jewel. The counterpart is a fungible token, for example a 10 euro note. The painting or the jewel is unique and cannot be replaced or exchanged for an equivalent object, while a 10 euro note, on the other hand, has many counterparts of the same value, namely all the other 10 euro notes in traffic.
Back to the digital world: the fungible tokens here are bitcoins, for example, which can be exchanged for any other bitcoin of the same value. But what about all the actual memes, Instagram videos, music tracks, and artwork floating around the virtual space? In theory, everyone can reproduce them with a few clicks and store them on their own hard drive. The concept of Non-Fungible Token was developed to authenticate the original and be able to exchange it.
How does a Non-Fungible Token work?
This token is made up of different blocks of information that follow one another to form a chain: this is the blockchain. Different information about the work is contained in the blocks, for example concerning its author, the buyer, the seller, etc. Also, a unique hash value (the hash value) is recorded in each block, along with the hash value of the previous block – this is how the chain mentioned above is created. What makes the technology virtually tamper-proof is the decentralized storage in a peer-to-peer or peer-to-peer network. All the computers connected to it have a copy of the chain of blocks and check the consistency of the new blocks and the hash values specified therein: any errors or falsehoods are therefore immediately detected.
The technology is not only used for Non-Fungible Tokens, but many are already familiar with it in connection with cryptocurrencies such as Bitcoin and Ethereum. If you want to buy an NFT on your own, you usually pay for it with Ethereum, as it is the most commonly used blockchain for NFTs.
What types of NFTs are there?
Non-Fungible Tokens are particularly prevalent in the art world – whether for the protection of simple videos and images or more elaborate digital works. In principle, any virtual good can also be associated with a token and thus protected. For example, unique elements of video games may have an NFT whose application is restricted to the owner of the token. Virtual plots or events can also be traded as tokens.
The following use cases can be considered in more detail:
Like cryptocurrencies, Non-Fungible Tokens are also traded on special online marketplaces, and some crypto exchanges now offer NFTs. The most famous, because the oldest, and now the largest NFT exchange in the world is OpenSea: since 2017, you can trade NFTs from various fields there.
The sale takes place both on OpenSea and on many other platforms such as Binance or SuperRare in two ways: at a fixed price or by auction to the highest bidder. To be able to take part in these exchanges, you need a suitable wallet (or "wallet") and the necessary crypto currency, in most cases Ethereum.
Currency is also the base on which you can mint or “mine” NFTs yourself. Basically, you need to upload the image, video or piece of music and have the corresponding token created which will then allow you to trade your asset.
Illustrious examples of trading with NFTs
Probably the most well-known example that has made headlines (and left many stunned) around Non-Fungible Tokens is the sale of a work by the artist “Beeple”. Since 2007, the latter has posted a photo every day on the Tumblr platform and then composed a mosaic of 5,000 individual photos. Beeple then auctioned the corresponding NFT at Christie's for around 57.8 million euros, despite the image being possible to reproduce by anyone in theory.
This artist is not, however, an exception when it comes to skyrocketing amounts: the NFT of the World Wide Web source code was sold by Sotheby's for around 5.4 million US dollars. The very first tweet on Twitter posted in 2006 went for US$2.9 million and basketball player LeBron James swept the day with a video of a ball toss that sold for around US$200,000. NFTs are also hot in Germany: FC Bayern sold trading card NFTs for around US$31,100.
The hope of all buyers is that the value of the respective Non-Fungible Token will increase over time, like real art and collectibles.
Possible problems and dangers with NFTs
Many people fundamentally wonder whether NFTs are really serious, since the associated works remain in most cases easy to copy, their purely virtual possession being abstract and of uncertain value. Developer Geoffrey Huntley has made a point of bringing this absurdity to light through a particular action: he has stolen and copied all the NFT images available and uploaded them jointly to the NFT Bay platform. The volume of data collected in this way amounted to 17.96 terabytes of images. Non-Fungible Tokens were not affected by this situation per se, but the images could still easily change ownership.
There are many harsher criticisms regarding the carbon footprint of NFTs. Electricity consumption for the generation of blockchains is very high. A British artist and technologist calculated the electricity consumption for the production of a total of 18,000 Non-Fungible Token and estimated it at 340 kWh, almost 7% percent of the average annual electricity consumption. of a French household. This translates to a CO2 emission of 211 kilograms per NFT, as much as a two-hour flight.
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