The NBA is using them to sell highlight videos. Artists are using them to sell digital works. Musicians are using them to retain royalties. Twitter's CEO is even using them to sell tweets.
NFTs, or non-fungible tokens, are suddenly everywhere in digital media. Once an obscure part of the broader blockchain technology world, they have boomed in recent months thanks to the sudden embrace of almost all corners of the art, entertainment and media worlds.
The excitement is fueled in large part by an idea that can be difficult to fully appreciate: ownership of a digital asset ... or at least the feeling of ownership.
"That's the difference of how people need to be thinking about this technology," said DJ and producer 3LAU, whose real name is Justin Blau. "There's something about ownership that makes people really excited."
And people are buying. Christie's auction house on Thursday sold its first piece of NFT-linked digital art, which commanded a winning bid of $69 million. A digital collectible card of soccer superstar Cristiano Ronaldo recently sold for more than $289,000. Former T-Mobile CEO John Legere paid $888,888.88 for a piece of NFT art released by DJ Steve Aoki.
It all raises the question: What the heck is an NFT?
What is an NFT?
It's easiest to answer the question metaphorically. Think of an NFT as a certificate of authenticity. But instead of a sheet of paper, it's a unique string of characters. For example, the NFT for this piece of digital artwork created by actress Lindsay Lohan is 0x60f80121c31a0d46b5279700f9df786054aa5ee5.
That string is connected to a blockchain, the same concept that powers cryptocurrencies like Bitcoin. The main difference is that bitcoins are fungible, which means they are essentially the same. NFTs are non-fungible — each one is unique.
Blockchains work by using groups of computers to create a shared digital ledger that no one computer can change. Instead, they must agree by performing complex calculations — a system that yields a secure and unchangeable document.
That makes blockchains perfect for creating systems in which unique digital identifiers can be easily and securely exchanged — hence the creation of NFTs.
Who decides who owns an NFT, and where do you own it?
Anybody can create an NFT — but that doesn't mean anyone will buy it.
NBA's Top Shot is a helpful example here. Top Shot is a digital platform with its own trading cards that uses NFTs to track ownership.
The NBA partnered with Canada-based Dapper Labs to create Top Shot, selling digital packs of cards that have been in high demand. Buying a pack means you then own the NFTs connected to those cards. That ownership is tracked on a blockchain created by Dapper Labs. You can then showcase your cards online.
They've been wildly successful, with packs sold out and cards going for tens of thousands of dollars.
Could you make your own NFTs connected to NBA players and highlights? Sure, although it's unlikely anybody would pay for them, and you could end up sued by the NBA.
Some artists have already discovered NFTs connected to their art that they didn't authorize.
Couldn't I just copy the image of that card?
Absolutely. But much like a poster of the "Mona Lisa," nobody is going to pay much for a copy.
But the question of copies does get to why some people are calling NFTs a fad. The internet means scarcity of pieces of media like images is almost nonexistent. Ownership of an NFT doesn't confer much inherent value (the exception being when copyright use is included, which is rarely the case).
