NFTs, or Non Fungible Tokens, have recently seen a huge spike in interest over the last 6 months. So what are they? What the hell does fungible mean? Why is it a token? Why are people paying hundreds of thousands of dollars for a GIF of a pixelated pop tart cat with a rainbow shooting out of its ass? To most folks this seems like tulip mania. A bubble that will burst and eventually all these NFTs will be worth nothing. Its true that some projects will fall by the wayside as has always been the case. There will always be a Star Wars, and then a Battle Beyond The Stars. Or a Masters of the Universe, and then Defenders of the Planets. But overall what will come out of this recent boom is the Artist’s use of the underlying blockchain technology. This gives collectors the ultimate dream that they have always coveted yet never truly possessed: verifiable, immutable confirmation that the collectible they own is one of a kind.
Fungible means, “able to replace or be replaced by another identical item; mutually interchangeable.”
So non fungible means something that is not replaceable. Truly one of a kind. A perfect example of this would be your baby blanket. The year that your baby blanket was produced they probably made tens of thousands of that blanket and when yours was purchased it was just plucked out of that group of tens of thousands, as each of the blankets were completely identical and interchangeable or fungible. But once this blanket was your blanket as a baby and traveled with you through the earliest and most precious period of your life, it is no longer fungible. It is non-fungible. There is no other blanket like it in the entire universe because of its unique qualifier as YOUR baby blanket.
All art is highly collectible from the infamous Beatles butcher cover to Leonardo da Vinci’s Salvator Mundi, which sold in 2017 for $450.3 million dollars and is currently the most expensive piece of art in history. Both of these however, can be faked. There would be small discrepancies that I’m sure experts could point out but to the average collector, or worse someone just beginning to invest in art, counterfeit items are an issue. Enter blockchain technology. When we use blockchain verification to tokenize something that is non fungible like a piece of art, a song, or a poem, it becomes an NFT. Let me explain a little further.
With an NFT, each time it is bought or sold, that transaction is recorded on an immutable digital ledger called a blockchain. This recording is verified by a network of millions of different computers all simultaneously calculating the encrypted code of the transaction and verifying that it is valid. Even the most well known art authenticators in the world are still human and susceptible to errors. With blockchain verification each and every NFT is 100% guaranteed to be the real art.
Now we get to the beautiful part of this story, the humanity of collecting and self identity. We get a disproportionate amount of satisfaction from expanding our collections of whatever little niche thing we identify with. Call it tribalist instinct, call it the gatherer side of our hunter-gatherer nature, it is something inherent within everyone. Even the most dispassionate cynic on Earth still has some kind of interest in which collectibility comes into play. Wether it’s rare coins, golfing, action figures or hand bags there are things in this world right now that people will pay WAY too much money for if all you see in that item is its face value.
Beauty is in the eye of the beholder and when it comes to works of art there is no truer edict. NFTs, however strange they seem and illusive the technology is to understand, have completely changed the world of authenticating art and because of that they are 100% here to stay.