echo NFTs.
If you have ever seen this-
Then you probably know what we are talking about.
Recently I, (Saoussan) have been incredibly drawn towards NFTs, crypto bros and the drama that surrounds it all — but what exactly are NFTs?
It’s easier to explain in the form of art as that is what NFT s — a.k.a Non-Fungible Tokens — usually take the form of. Imagine you buy a painting, that painting would be the only painting on earth like it. You would be the sole owner of that unique piece where even the original artist would not have a copy. However in terms of digital art, it is harder to be the individual owner of an art piece. If you were to buy a piece of digital work, it could very easily be copied, pasted and printed onto a pillow sold on Lazada — all done with a right click. On the internet, it is much harder for people to prove that they are the owner of such pieces.
This is where NFTs come into play. For a thing to be non-fungible, it would mean that it cannot be replaced by an equal part or quantity through the paying a debt or the settling of an account. It also means that it would also not be capable of mutual substitution.
“But wait!” you might exclaim. “If NFTs are just digital entities can’t we just download them?” Well, NFTs are special because their true value does not lie within the image itself but instead within the string of numbers it is made up of once it is minted into the blockchain. Essentially, the image is put through a special process where it is encrypted into a scramble of digits by powerful processing machines (which do quite a number on the environment). The main feature of these NFTs are these encryptions which are used as proof of the ownership of said tokens as well as the only way for them to be purchased being with cryptocurrency (mainly Ethereum) and not through third parties.
The Intrigue From Large Corporations and Celebrities
Although many might misperceive NFT’s as a connective platform for creative freelancers and investors, it has additionally become a major boom for untapped potential, with many global companies venturing to commit to it as a new business prospect with the promise of substantial earnings.
A notable company that participated in this newfound sensation is GameStop Corporation, a gaming merchandise retailer based in the United States. With many gaming enthusiasts already willing to purchase virtual goods, it is to no surprise that GameStop has voiced out their plan to develop a nonfungible tokens marketplace and is actively looking into forming meaningful cryptocurrency partnerships, and have been vocal about their plans to invest in crypto companies. By doing so, they aspire to initiate an online platform to facilitate the process of selling, purchasing, and trading NFTs in the form of avatar outfits and weapons; both of which are virtual game goods familiar to gaming consumers. Whilst many were sceptical about this choice, it showed to have an immediate positive response, with GameStop gaining a 20% share price increase within hours of their announcement.
Following suit is none other than the South Korean conglomerate, Samsung. Samsung recently established a store, Samsung 837 X, within Decentraland — an open-source 3D virtual world platform (otherwise known as a metaverse). Modelled after Samsung’s 837 physical store in New York City, this blockchain-powered virtual store boasts quests to earn NFT badges, music events, a marketplace for digital assets like land and wearables, as well as accessibility to a virtual building consisting of a connectivity theatre, sustainability forest, and a customization stage. This virtual store is not the only feat that Samsung plans to undertake, as they announced their aim to ameliorate the viewing quality of NFTs by introducing an NFT explorer in the form of a TV and marketplace aggregator to amalgamate the browsing, purchasing and display of NFTs in one platform.
Companies aren’t the only ones partaking in this recent interest in NFTs, with celebrities racing to reap its benefits. At the top of the list is Grimes, a Canadian musician, who sold 10 pieces of digital artworks valued at around $6 million in 2021. The most expensive artwork, “Death of the Old”, which sold for $389,000 was of noticeable interest to many as it showcased glowing lights, castle ruins and flying cherubs. And here’s the catch: it was all accompanied by a song curated by Grimes. However, the majority of the collective sales was attributed to the WarNymph Collection, featuring two original pieces entitled Mars and Earth, both of which sold for $7,500 each. Both these pieces feature weapon wielding cherubs flying above the appellative planets and are set to original music of Grimes’ making.
Ultimately, NFT’s aren’t necessarily pieces of artwork but can be presented in various formats, provided that they are all virtual. Although many people recognize individual-based NFT’s, it’s important to note that NFT’s are amassing global interest from individuals and corporations alike.
The NFT Hall of Fame (International Edition)
If we’ve still got you intrigued, we will now present you with some NFT’s that were the pinnacle of people’s interest and took the virtual world by storm.
1) The First Tweet
That’s right, ladies and gentlemen, one of the most popular NFT is not a piece of digital artwork or virtual goods. Rather, it’s none other than the first tweet posted by Twitter’s founder, Jack Dorsey, on the 21st of March 2006. The tweet, which features a rather blatant typo error, was sold to Sina Estavi, the Malaysian-based chief executive officer of Bridge Oracle. The tweet, with a value that was said to be akin to that of the painting of Mona Lisa, was sold for $ 2.9m using the ether cryptocurrency, with proceeds converted to bitcoin to be donated to the Give Directly Africa Response fund.
2) Doge
There’s a high chance that you’ve already heard and/or seen the picture of this lovable Shiba Inu circulating on the Internet. “Doge” was originally a meme dating back from 2010 which features the Shiba Inu, Kobasu, and was the main star of the cryptocurrency, Dogecoin. In 2021, the jpeg of “Doge” was sold as an NFT for $4 million. With many still enamoured by this Shiba Inu, PleasrDao — the recent buyer of the Doge NFT — sold fractional ownerships of DOG tokens to fans worldwide. With this fractional token sale, the Doge NFT’s value has skyrocketed to approximately $ 220 million.
3) Everydays: The First 5000 Days
Our NFT Hall of Fame would not be complete without featuring this digital artwork curated by the artist Mike Winkelmann, better known as Beeple. The NFT, which is a collage of 5000 digital images dating back from 2007 showcase both hand drawn and computer produced art, including images of prominent public figures. This NFT was sold for $69 million at Christie’s, an art and luxury business.
4) CryptoPunks
Widely recognised as the NFT that started it all, the CryptoPunks is a collection of 10,000 distinct and collectible virtual characters created by Larva Labs Studio in 2017 by two software developers: Matt Hall and John Watkinson. Inspired by the London punk scene, the characters were designed to be punks and non-conformists to reflect the anti-establishment spirit of the blockchain movement. The total sales of the NFTs have amounted to a total of $251,620,000 — and shows no cessation of its growth in near sight.
5) Nyan Cat
Another internet sensation, the Nyan Cat NFT is an artwork that is already known to many. Featuring an animated flying cat leaving behind a rainbow in its path, the artwork was created by Chris Torres in 2011. In 2021, Torres put up a remastered version of the GIF for sale on its 10-year anniversary. Utilising a digital goods platform, Torres managed to gain a final bid of $ 580,000. .
The Malaysian NFT Space
You may think that NFTs are a foreign concept but you may be surprised that NFTs are incredibly popular in the Malaysian art space too.
I myself (Saoussan) had to do a double take when noticing a billboard on one of the main highways advertising an NFT project called punks.my– a collection of Malaysian inspired pixelated avatars.
I was even more surprised to find out that the father of one of my friends whose job is an artist, had been dabbling in the subject. Although, if you were to scroll through Twitter alone, you would find that most Malaysian artists have been avid supporters of the tokens. This was also proven to me in one of my visits to an art exhibition at Fahrenheit with their last installation being a promotion for a video game with its main characters’ alter designs being NFTs.
However, one of the most prolific example that showcases the popularity of NFTs is Taiwanese-based singer Namewee who sold his song Fragile as an NFT for RM 3.5 million. Along with the song, he also auctioned 20 photos of him flipping off government banks and financial third party groups used to handle transactions. In his video, he states how NFTs help artists by giving them full control of the pieces being sold.
The Benefits of the System
While they do gain a lot of hate (especially from art communities and people who care about rising sea levels), there are some benefits to NFTs and their existence. The most important advantage that NFTs have is the lack of third parties involved in a transaction between an artist and the buyer. This eliminates the need to pay commissions to banks as well as provide more independence from government control. It also includes eliminating other companies on social media for example from profiting off an artist using their site to post certain works using advertisements.
NFTs also (as mentioned earlier) allow the ease of associating an owner with their digital piece of property/possession. Being able to track this normally would usually be an arduous task due to questionable security on the Internet as a whole. However, with a piece of work being minted into a blockchain and having a unique encryption it is much easier to show proof of ownership.
The Cold, Hard Truth About NFT’s
As memorable as NFT’s may be, the main unanswered question remains in the eye of people’s minds: is this investment really worth it? Some are still doubtful of the supposed utopia of NFT’s, with its promises of riches abound — and perhaps rightfully so.
A prominent disadvantage of NFT’s might be one that you wouldn’t have even thought about: sustainability. That’s right folks, individual NFT’s were estimated to be partially responsible for emitting carbon dioxide generated by cryptocurrencies necessary for the purchase and selling of NFT’s.
But how exactly are NFT’s environmentally unethical? The answer lies in the transaction process of NFT’s: mining. Major NFT marketplaces rely heavily on Ethereum for their sales transaction, which utilises a “proof of work” system, whereby secure records of NFT transactions are maintained by ensuring that users solve puzzles of verified transactions in order to receive tokens or transaction fees. Ultimately, this entire process requires a significant amount of energy, with Etherum supposedly consuming the same amount of electrical energy as Kazakhstan.
Moreover, many have been quick to recognize the uncertainties in NFTs, namely its security concerns. With NFT’s being reliant on blockchain technologies, users are automatically in need of using centralised marketplace platforms to facilitate interactions and transactions with digital assets. As such, NFT’s are vulnerable to the risk of being lost should the platform’s system be compromised as the NFTs are stored in this central system. Although it is possible to compensate for the financial loss, the retrieval of the NFT is said to be rather difficult.
Finally, many have been quick to point out that NFTs may not be all that worth investing in due to the challenges in its asset ownership. Let’s take a digital artwork to elucidate this concern. Imagine that you decide to buy an NFT in the form of a digital artwork. You wouldn’t actually own the image itself, but rather the identifier of said artwork. That identifier would then lead you to view the NFT on a third-party platform. Essentially, you do not own the NFT itself, but rather the identifier, which leads to the concern of the seller company going out of business, resulting in the loss or devaluation of the NFT.
And that’s a wrap on our beginner’s guide to NFT’s! By delving into the mechanics of NFT’s, the many forms of NFT’s, the involvement of corporations and celebrities in its investment, the hall of fame (with a notable amount of memes incorporated), as well as a brief discussion to weigh the pros and cons of NFT’s, we hope that this article gives you a valuable insight about all those headlines and news articles that you’ve been seeing (but haven’t fully understood). Ultimately, people are split between denouncing the value of NFT’s and singing its praises, but the answer to the following question is entirely up to you; are NFT’s really worth it?
By Julia Rosalyn and Saoussan
