A JPEG file can earn you millions!
A JPG file made by a digital artist known as Beeple sold on 11th March, 2021 for almost $69.3 million by Christie’s auction house, this set a new record in the digital arts market.
This is the artwork, a digital collage called “Everydays — The First Five Thousand Days,” is what’s known as an NFT.
What is NFT? It stands for Non-fungible Token. A fungible item is something that is replaceable by another identical item; mutually interchangeable, for example a Rs.100 note can be replaced by 10 Rs. 1o notes but the values remain the same. But the original Mona Lisa painting cannot be replaced by any printed Mona Lisa poster, thus Mona Lisa painting is Non-fungible. Since the above painting is a digital only painting, one may argue that we can make many copies of it which are replaceable. A NFT(non-fungible token) solves the problem. NFT is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. In other words it gives a person the authentication that he/she is the owner. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.
In 2017, John Watkinson and Matt Hall created unique characters on the Ethereum blockchain. Characters were limited to 10,000 and are unique. They called their project Cryptopunks as a homage to Cypherpunks, who experimented with the idea of cryptocurrencies in the 90s. Project Cryptopunk helped NFT become mainstream. The value of NFTs skyrocketed. Twitter CEO Jack Dorsey sold his first tweet for $2.9 million!
Why are NFT’s so expensive? Most people think that it is just because of the speculation. People buy it from the primary market and expect a higher return for them in the secondary market due to their demand. Also the NFT market is not regulated so artists can list their art work and in order to popularise it they may just purchase it at an insanely high value from other wallet IDs.
The main Ethereum NFT marketplaces include:
Since most NFTs are Ethereum-based tokens, many marketplaces for these collectibles accept Eth tokens as payment. One has to have a cryptocurrency exchange account to make a transaction.
The biggest advantage of NFTs is that it has given the digital art makers a platform to sustain and grow their work. Previously they could have only shared their work in social media of likes and comments for their support, now they can even earn their livelihood by selling their art. Also the art collectors get exclusivity with the authentication certificate of ownership. However a prominent disadvantage is that it harms the environment as energy required to mine Bitcoin and Ethereum is very high.
Is it a NFT bubble? Maybe. NFTs are mostly traded in exchange for crypto currencies which are not backed by tangible assets, thus the value of these may differ a lot, and once it starts falling the snob value will no longer be sustainable.
But it is too early to say anything about NFT keeping in mind the current high in the market. Till then we have fun making our own NFT!
–Paras Madhuram Jasrasaria
F.Y. B.Sc.
References:
- JPG File Sells for $69 Million, as ‘NFT Mania’ Gathers Pace …https://www.nytimes.com › Arts › Art & Design
- Non-fungible token – Wikipediahttps://en.wikipedia.org › wiki › Non-fungible_token
- The Rise And Fall Of NFTs – Analytics India Magazinehttps://analyticsindiamag.com › the-rise-and-fall-of-nfts
- How to Buy NFTs Right Now • Benzingahttps://www.benzinga.com › money › how-to-buy-nfts