The New York Times archives are filled with thousands of stories in print storage and digital databases. Subscribers can access and read these stories whenever they like. However, on March 24th, 2021 a collector paid more than $500,000 for a non-fungible token (NFT) of the first article the Gray Lady ever published about NFTs and cryptocurrency. The NFT, like other such tokens, grants the owner exclusive digital ownership rights – in this case to a relatively short newspaper column that remains publicly available. The NFT owner has no claim on the article’s copyright or even a physical clipping of the piece.The value, of course, comes from the subject matter and the article’s collectibility. The astronomical price tag highlights the growing popularity of NFTs. NFT creators – or “minters” as they are known – turn widely consumable digital assets like videos, GIFs, tweets, music, art, and video game features into one-of-a-kind collectible digital items, but who are these minters and what do they get out of it?
What are NFTs?
An NFT is a unique unit of data that represents a real-world object or item of digital content. NFT developers are revolutionizing how the concept of ownership can be monetized and appreciated. These NFT creators are a unique group with different motivations and goals, but they all are ushering in a new era for the understanding and provable tracking of ownership.
Non-fungible tokens can take something that is mass produced or mass consumed and turn it into a unique, rare artifact often by using blockchain technology. Each NFT is built using a custom digital code that is stored on a blockchain such as Ethereum, ensuring it cannot be counterfeited or reproduced. NFTs are neither currencies nor securities in that they can’t be exchanged directly for other NFTs. This is what makes them non-fungible. Like an original piece of art or other types of collectables, their value is primarily in the eye of the beholder and is only worth what someone else is willing to pay for it. Unlike art, an NFT can’t be destroyed and ownership and provenance are far more easily verifiable. For those doubting the legitimacy or staying power of NFTs one thing is for certain: the market for NFTs is real. A variety of online marketplaces and even famous auction houses like Christies are selling NFTs, and often for staggering prices.
In 2021, total volume of NFT sales averaged over $100 million per month as their popularity and public awareness booms. Early 2021 attracted an explosion of speculators who anticipate that NFTs today may be like owning a collectable piece of art before the rest of the world knew how good that artist was. NFTs are also unique in the wide diversity of what can become an NFT. Currently, NFT-backed digital items range from brief video clips to video game skins to audiobooks and even tweets (Twitter CEO Jack Dorsey’s first tweet sold for $2.9 million as an NFT).
Who Creates NFTs?
Entrepreneurs, art advocates, corporations, and even average Joes and Joannas create NFTs. Many take digital content that they have created or own, and mint the NFT that backs it. Minting NFTs has become a practical reality due to the ability to use blockchain technology to create unique products. The Ethereum blockchain is the most common way to build NFTs and is thus the most frequently used cryptocurrency for buying NFTs. For less than a $100 in cryptocurrency, many platforms and marketplaces, like OpenSea, Rarible, and Mintable will create an NFT from any type of digital content. This has opened the field to content creators, subjects, and novices to create their own NFTs. No experience is necessary, and as long as someone can prove they created or legally own the content, they can build an NFT. For authors, artists, videographers, social media personalities, video game enthusiasts, and others, creating an NFT from their work can lead to surprisingly high yields when they bring their NFT to the market.
Other NFT creators are entrepreneurs seeking to capitalize on the booming market. Corporations, including professional sports associations, social media companies, and brands like Taco Bell and even Charmin toilet paper are all using NFTs to generate buzz and revenue. Some companies specialize in speculating on NFTs, banking that their value will continue to increase. NFT creators have different motivations, but with user-friendly technology and a thriving market, content makers and businesspeople alike are building their own NFT portfolios. Newspapers are publishing each issue as an NFT and sports collectors are minting NFTs from famous moments in sports history. In the future, it’s possible that much of the new content being produced will become NFTs. Like connoisseurs of art, wine, or trading cards, NFT collectors will purchase new NFTs with the hope that demand will increase as that product or creator grows in popularity.
Why Create NFTs?
The 2021 boom in NFTs has coincided with increased popularity and mainstream acceptance of cryptocurrencies. Cryptocurrency supporters see the various types of alternative legal tender as offering huge advantages over traditional fiat currency. NFTs are built using blockchain technology and typically paid for with cryptocurrency. While volatility continues to be an issue, cryptocurrency prices have skyrocketed in the past three years, as increasing numbers of institutional and retail investors buy into the market. There is also a practical element to creating NFTs that makes them appealing. Using blockchain and cryptocurrency gives NFTs a few advantages over other types of collectables and entices more content owners to make NFTs:
- NFTs are almost impossible to forge or counterfeit because each has a unique identifier with its blockchain code.
- Unlike a piece of art or a rare baseball card, no experts are needed to verify the authenticity and organize a sale. NFTs can be authenticated and sold entirely in online marketplaces without any middlemen.
- NFTs are much easier to buy and sell. With nearly instant transfers from remote locations around the world, NFTs are the perfect collectable for the online world.
In addition to creating NFTs to compete with the traditional collectable market and to capitalize on the boom, some creators make NFTs for other, more intrinsic reasons. The internet has made most types of art, music, videos, and writing free for public consumption. NFTs push back on this notion by bringing recognizable and monetizable scarcity and rarity to online content – even if it can be viewed for free.
The online artist Beeple sold his original art as an NFT for nearly $70 million, demonstrating the high market potential. NFTs are increasingly becoming a common way for online content creators to be recognized and paid for their works. The jury is still out on whether NFTs are a good investment and will maintain their popularity levels over time. Those who mint NFTs are banking on the value of digital assets and tokens as the digital world continues to grow and people want more scarcity and significance, even as free content remains the online norm. For many NFT creators, they represent something even more than a monetary opportunity: NFTs endow value and significance to online content that is all-too often taken for granted.
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