NFT: What does the acronym stand for?

Are you interested in blockchain and cryptocurrencies? You may have encountered the term “NFT” before. But what does NFT really mean? The explanation for this is quite simple. Whether the hype is justified and for whom NFT is worthwhile is the really intriguing question that GIGA editor Biagio has been dealing with.

Be honest: Blockchain and cryptocurrencies can be incredibly confusing. On the one hand, it is due to the thematic proximity to the stock market, which no one really understands. On the other hand, you are often presented with keywords that are not explained.

Same with NFT. I’ve researched the subject and many hours – and headache pills – later I get it now … I think. I send a warning in advance: it will be absurd.

Let’s start with the basics.

What is NFT?

The abbreviation NFT stands for Non-fungible token. Anyone who had Latin at school or likes to eat pizza mushrooms at the Italian restaurant on the corner could now try to deduce it: something with mushrooms. Or just non-mushrooms.

Please wait

No, NFT has nothing to do with food.

NFT, or Non-Fungible Tokens, are unique tokens that cannot be exchanged one-on-one for a matching token. For example, a € 5 note would be a fungible token as it can be exchanged for any other € 5 note. Or, if we want to stay in the crypto context: 1 bitcoin can be exchanged for another bitcoin.

How does NFT work technically?

Basically, NFTs are no more than part of the Ethereum (ETH) blockchain. Ethereum is currently the second most valuable cryptocurrency after Bitcoin. NFT is on the Ethereum blockchain, but has some extra features compared to Ethereum coins to differentiate them. NFT is also not exclusive to Ethereum. There are already other blockchains making their own NFT.

What can be mapped as NFT?

Short answer: everything.

Long answer: The sensible uses of NFT are currently still being explored. However, there are currently a number of uses that have been established.

NFT can for example be:

  • (digital) works of art
  • change cards
  • game items
  • music

In particular, the art scene quickly proclaimed the NFT as the new savior. After all, at first glance, NFT solves a major problem in digital art. A digital image can be reproduced any number of times while remaining identical and interchangeable (interchangeable, remember). But if a digital work of art is displayed as an NFT, it is unique and therefore also as collector’s item Interesting. It’s a bit like an art print. This is initially fungible. But if the print is signed by hand, it will be unique.

That sounds like a good idea in theory. But a quick look at reality is enough to discover the first absurd application examples.

A $ 3 million tweet

Twitter founder Jack Dorsey recently sold his first tweet as an NFT for nearly $ 3 million. Wow, someone bought a piece of world history. In the coming centuries, people will be able to see precisely and exclusively from this NFT that in 2006 it was cool to write terms without vowels.

Photo credit: Jack Dorsey (Twitter

3 million is something of a theft considering that now no one can just come and, let’s say, take a screenshot of that tweet and … wait – I … I just got a screenshot of it? It looks exactly like the tweet someone spent 3 million on! And this is where it can get a little confusing for many of us.

NFT: The issue of exclusivity

The exclusivity of a physical work of art like Da Vinci’s “Mona Lisa” is evident. The original hangs in the Louvre, is unique and priceless. We could take a picture of it (no flash!) Or buy a print of it and it would in no way diminish the value of the original.

With snapshots or prints, the difference to the original is also clear to our senses. But once a GIF or meme is saved, we have an exact copy of the original.

Image credit: Dave Roth

This “girl standing in front of a burning house” meme was recently sold as an NFT for $ 500,000. In return, we can experience it for free with our senses and find it as fun or not fun as the original. Why would anyone spend half a million dollars on this?

This can not be due to the image rights, because these remain with the original owner even with the NFT acquisition. It also means that owners can sell as many copies of this meme as NFT as they wish.

What you are actually buying is one exclusive access to the Ethereum blockchainwhich is related to a physical or virtual product.

Are NFTs worth it to me?

NFT allows artists to more easily monetize their digital creations. In addition, NFTs can be configured so that the original owner receives money each time the NFT is resold. Musicians are hoping for a new sales opportunity. An NFT song could be uniquely identified with each share and generate royalties for the artist.

Things are a little different for collectors. The market rules apply here, which also apply to the normal art trade in physical objects. Do I trust that the value of my NFT will increase in the future? Then I should take it. Maybe this video from Beeple, which changed hands like NFT for $ 6.6 million, will be double in a few years.

This Beeple video went over the virtual disk for $ 6.6 million (Image source: Beeple)

Anyone who has paid $ 20,000 for a video clip of YouTube star Logan Paul as an investment must also trust that Paul will not wildly sell more copies of the freely available videos like NFT. Of course, no one can predict with certainty whether Paul, who, among other things, earns his money by capturing suicide victims in a Japanese forest on camera and posting them on his channel, is so greedy. The bottom line is NFTs are another form of speculative capital goods whose value depends on many different factors. Due to the hype, they are currently primarily a playground for the ultra-rich, who can show off their trophies.

Quite creative – the curious cryptocurrencies in ours Video:

Where can I buy NFT?

There are already several major marketplaces dedicated to buying and selling NFT. One of the largest platforms is OpenSea. Here you can buy everything from art to trading cards to memes at NFT. Rarible is also a large NFT marketplace run by a dedicated community.

How harmful is NFT to the environment?

Cryptocurrencies have been one of the biggest for years CO2 drivers in the world and NFT is no exception. To create an NFT, Ethereum must be “mined”. According to estimates, a single NFT produces about 90 kg of CO2 – as much as an hour in an aircraft.

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