All the news about NFTs in recent weeks has undoubtedly left many people scratching their heads wondering, “What exactly is an NFT?” and “Why are people spending so much money on them?”
Here’s an explanation of NFTs.
What does NFT stand for?
NFT stands for non-fungible token.
What does fungible mean?
Fungibility refers to how unique an asset is. Bitcoin, for example, is fungible because all bitcoin is worth the same and interchangeable. When something is non-fungible, it means it is unique in its value and one-of-a-kind, like a work of art. If you exchange one piece of art for another, you have something completely different with a different valuation.
So, how does an NFT work?
Non-fungible tokens transform digital works of art, or other collectibles, into verifiable assets. It allows anyone (who can afford it) to buy and sell unique digital items via blockchain technology.
These digital assets can be anything, from a digital drawing, gif or song to a tweet. Yes, a tweet. Jack Dorsey, the co-founder, and CEO of Twitter, recently sold his first tweet as an NFT for charity.
The tweet from March 21, 2006, which simply read “just setting up my twttr,” sold March 22 for more than $2.9 million.
Paris Hilton auctioned off a digital painting of her cat, Munchkin, as an NFT for charity. It sold for around $17,000.
Many people have likened NFTs to the evolution of fine art collecting, only with digital art. Like an original painting, NFTs can appreciate and be sold. And besides having the bragging rights of owning an NFT, buying these digital assets allows collectors to financially support artists or raise money for charity.
What about copyright?
Purchasing an NFT does not give the buyer the copyright to the digital artwork they are buying. When someone buys an NFT, the digital ledger acts as a certificate of ownership. If anyone copies the NFT, it won’t be the original. Just like you can buy copies of famous artworks.
The artist or creator maintains the copyright and reproduction rights for their artwork. However, the owner does have usage rights that allow them to post it on an online platform.
NFTs are another example of how blockchain technology is transforming the way people conduct business.
Interested in learning more about the ever-changing world of blockchain and cryptocurrency? University Canada West has several micro-credentials focused on technology, business and innovation, including two that cover cryptocurrency – the Blockchain Project Management Certification Program and Blockchain Entrepreneurship.
For more information visit ucanwest.ca/micro-credentials.
Published on April 9, 2021.