What’s the Deal with NFTs?

What’s the Deal with NFTs?

Annie Li, Contributing Writer

NFTs, also known as Non-Fungible Tokens, are a form of cryptocurrency designed to give full ownership to any sort of digital creation such as art, music, or games.  NFTs use blockchain technology to create a unique digital file that cannot be replaced.  They can be bought through auctions on marketplaces using ethereum coins.  Unlike bitcoins which are fungible, NFTs are non-fungible, meaning that they are one of a kind and the token cannot be replicated.   For example, bitcoins are interchangeable and you can trade one for another, and receive the same exact thing, but not for a non-fungible token.  Some creators buy NFTs to protect and prevent others from stealing their work.  Owners can also choose to sell their NFT, making the buyer become the new owner. 

“You really only make money from NFTs if the value of your token goes up and someone is willing to buy it from you, otherwise I think it’s a waste of money,” said freshman Eva Franchetti.

NFTs have been in the market for a while now but only had an upsurge a few months ago. These NFTs are unregulated in the market and don’t have much economic use.  They’re currently being sold for mainly bragging rights since there’s no utility to it.  When someone buys an NFT, they are merely receiving a file while the creator still retains the copyright and reproduction rights.  Value is created through scarcity, so holding a file with an image that others can copy is quite useless.  The NFT is like a digital certificate saying you own the original work, but other than that, there is no useful purpose to it.

“The idea of NFTs has a lot of potential, but is currently being abused by people who are using it to trade useless JPEG images,” said Rockefeller Investment Co. CIO Jimmy Chang.

EtherRocks was an NFT project created on the Ethereum blockchain back in 2017. They’re JPEGs of a cartoon rock, merely traded with absolutely no purpose other than getting bragging rights for owning one of the 100 rocks in the project.  On Aug. 23, one of the EtherRocks was sold for $1.3 million, becoming the most expensive pet rock to be traded.  The idea of buying an image of a cartoon rock for an insane amount of money is quite absurd, but it’s the FOMO that’s keeping these buyers going.  Many buyers don’t want to miss out on events such as this NFT frenzy. 

“For some NFTs, you can make the argument that they are aesthetically pleasing, they have an amazing origin/generative story, they can be used in a game, etc.  None of these are currently the case for rocks,” said NFT collector Andrew Kang.

The hype for NFTs continues to grow as major celebrities and brands such as Marvel, the NBA, and even Elon Musk’s girlfriend, Grimes, come to create their distinctive tokens.  Some of the best-selling NFT artists include Beeple, who sold a collage piece for over $69.3 million, Fewocious, and PAK. 

“I believe buying NFTs is a stupid idea and don’t understand why people would spend thousands to millions of dollars just to hold a useless JPEG file,” said junior Shanata Huang.

Students who want to get involved with NFTs will need to ask their guardians for assistance.  To start, you’ll need to open a digital wallet that will allow you to store and purchase cryptocurrencies such as ethereum coins.  You can buy cryptocurrencies through brokers such as Robinhood or Coinbase.  There are many marketplaces to purchase NFTs.  Currently, many popular ones include OpenSea.io and Rarible.

As the craze for NFTs drives upwards faster than ever before, people are starting to put up their own digital artwork and tweets for sale as tokens, hoping to make millions of dollars from them.  NFT investments are speculative, and some believe we are in a bubble, so there is still a great uncertainty of how revolutionary they will become in the future.