Written by Chloe Lawson
NFT stands for ‘non-fungible token’. Non-fungible means that it is entirely unique and irreplaceable – a collectible! If I borrowed 10 pound off of you and I gave you a tenner back, you wouldn’t necessarily care if it was the same 10 pound note or if I gave it back to you in coins, as long as you got your money back. That 10 pound note is fungible. An NFT, on the other hand, is unable to be substituted for something similar because of its digital signature.
In order to understand what an NFT is, you can take a look at physical forms of real-world art.
Take one of the world’s most famous paintings, the Mona Lisa. It is believed that Leonardo da Vinci began the Mona Lisa around 1503. The innovative techniques used to paint the Mona Lisa and its rarity is central to the value of the painting. Additionally, the portrait has years of history, including being part of a royal collection, being stolen from the Louvre in 1911 and being evacuated during the war. It is truly iconic and now a part of our culture. In 1962, the Mona Lisa was insured at a value of $100 million which in 2021, adjusted for inflation, equates to more than $867 million.
You may not like the painting itself but you can’t deny its rarity, ingenuity and history and therefore its economic and cultural value. This makes the Mona Lisa entirely unique and non-fungible.
Not to compare the masterpiece that is the Mona Lisa with the meme of Nyan Cat, but an NFT is a digitised version of this, with a few twists.
NFTs are a sequence of numbers and letters that mainly work off the Ethereum blockchain. Ethereum is a cryptocurrency and its blockchain allows the NFT to be easily transferable, easily identifiable and fraud proof because these sequences of numbers are publicly verifiable. That means anyone can take a look at who owns the asset, who sold it and when it was sold (this is decentralisation, but that’s for another time). It won’t actually say your name and where you’re from but rather create a record of the sequence of numbers and letters during the transaction. This also acts as a digital certificate of authenticity, so for digital art we have a solidified way of ensuring that it is actually the real thing.
The scarcity and identifiability of an NFT also makes it more valuable. NFTs have become super popular within the last few years because not only are they being sold for large amounts of money, but most of them are memes. Memes are already digitised because they’re images that are stored and circulated on the internet and people are making money by selling the memes represented by these non-fungible tokens.
Just recently, the “Disaster Girl” meme as an NFT sold for around $500,000. The image of 4 year old Zoe Roth was taken by her father in North Carolina back in 2005. Now 21, Zoe sold the original photo in order to pay off student loans.
Photo courtesy of Dave Roth
And you guessed it, Nyan Cat sold for an insane amount as well. The cat flying with a rainbow coming out of it’s rear sold for around 300 ETH (Ethereum) which is equal to around $590,000. Just to clarify it’s not the .GIF that’s been sold, it’s a token representing the meme.
So, why are people paying so much for a meme when it’s already been shared thousands of times and can be saved by anyone on the internet? The CEO of SuperRare, a site that sells NFTs, thinks people are buying these tokens because they provide a connection to the creator in a way that other art forms don’t (Grace Kay, 2021).
Just like the Mona Lisa, memes have become an art form that have been used to add emotion into everyday conversation. They have become a part of our culture and although the image file may not be rare, the possibility of being able to own a token representing the meme is pretty special to those who feel a connection to the original meme.
NFTs aren’t solely memes though. Jack Dorsey, the founder and CEO of Twitter, sold an NFT of his first Tweet published to the site in 2006 which read “just setting up my twitter”. The NFT sold for around $2.9 million. Evidently people are incredibly eager to own a piece of history.
Would you buy an NFT if you had the chance?
Featured image courtesy of Christopher Torres.
Kay, Grace. “We talked to crypto-art investors to figure out what’s driving people to spend millions on NFTs, despite no guarantee their value will increase”. Business Insider. 20 March. 2021. https://www.businessinsider.com/why-are-people-buying-nfts-investing-in-nft-crypto-art-2021-3?r=US&IR=T