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What is an NFT and how does it work?
Three letters, an acronym, have become one of the terms that has burst in with more force in recent times. It is NFT, Non Fungible Token or Non-Fungible Tokens, in Spanish, which is a digital certificate of authenticity that, through blockchain technology, the same one used in cryptocurrencies (tokens), is associated with a single file digital. From there, a new form of digital expression has been built on the rise.
If the previous explanation of what the NFT consists of has not cleared all doubts, it should be remembered that a non-expendable good is one that is not consumed with its use, that cannot be replaced and that is not substitutable. It is something unique, unlike what happens with money: you can freely exchange a 10 euro bill for another 10 because both bills have the same value, they are fungible. The same goes for cryptocurrencies. At the other extreme, a work of art is the most illustrative example of a non-expendable good: it is an unrepeatable, unique piece, irreplaceable by another.
Now let’s take all this to digital. NFTs are individual units – image, video, audio, text or compressed file – with a unique value. This is possible because each digital asset obtains an identifier in which metadata (author’s name, its initial value or its sales history) is registered using blockchain technology, which guarantees that the piece cannot be duplicated.
With these premises, these assets have caused a kind of new gold rush in the form of crypto art. The sale of NFTs is a new way of (trying to) earn money easily in the online world, but the truth is that there are many artists, influencers, celebrities, companies and organizations that are riding a wave that, in 2021 , generated more than 3,000 million euros.
According to a recent analysis by ArTactic, “the art world is undergoing a generational shift towards young collectors”, especially driven by new millionaires whose fortunes come from technology companies in Asian countries. It remains to be resolved whether NFTs have become the new bubble or, on the other hand, whether they have established themselves as one of the main agents in the art world. Right now, huge amounts of money are being paid for files of artwork, memes, trading cards, and just about anything else that can be recorded digitally.
An exact date can be fixed when NFTs entered a new dimension. It was on March 11, 2021, when the JPG file ‘Everydays – The First 5,000 Days’, created by the artist Beeple (Mike Winkelmann) was sold for 69.3 million dollars (57.8 million euros) by Christie’s auction house in New York.
By Samantha Murphy Kelly
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