What is your best digital work of art

NFT: Everything you need to know about the crypto hype Elon Musk dedicated a song to

NFT: What are Non-Fungible Tokens?

Hype, hysteria and art - but what are NFTs? For many, the phenomenon came out of nowhere. Since the end of 2020, NFTs seem to be turning the art, culture and collector's market upside down. Musicians like the singer Grimes, Deadmau5 or 3lau suddenly sold and auctioned so-called non-fungible tokens and turned over huge sums of money. Sometimes in the form of short videos, as animation, but also as a classical music album. The basketball association NBA, however, sold digital trading cards and Formula 1 a virtual sports car. The graphic designer and animator Mike ‘Beeple’ Winkelmann even became one of the richest living (digital) artists with the auction of an NFT for a picture collage. For the equivalent of 58.86 million euros the “Everydays: The First 5000 Days” work changed hands. (Also read: Robot Sophia - The first work of this “crypto artist” is worth $ 688,000)

With the sale of “Everydays: The First 5000 Days” ‘Beeple’ became one of the richest living artists. The work is a collage of 5000 digital images - including this one.

© Mike Winkelmann

NFTs: Unique, smart contracts on blockchains

But what is really being sold there? Both Non-fungible tokens it is a technology that is based on modern variants of the blockchain. These are the digital cash books that stand behind cryptocurrencies. While with Bitcoin only simple currency transactions are stored on the blockchain, programs can also be written into the blockchain of Ethereum, NEO, WAX, TRON, Tezos and others - so-called “Smart Contracts”. These enable entries on the blockchain that cannot be split up or exchanged like crypto currency units, but are unique. NFTs are such entries. (Also interesting: Elon Musk confirmed - you can now pay with Bitcoin at Tesla)

Non-fungible tokens are similar to digital certificates of authenticity

On a platform such as Foundation, OpenSea, Rarible or Super Rare, an artist can upload his work and generate an NFT - for a fee. This becomes the work of art a unique signature created, which is stored in the blockchain, but not the work of art itself. The signature can only be in the possession of a single person - or their crypto money wallet - and can only be passed on by this person. If an artist sells an NFT, he does not sell the work of art itself, not even the copyrights or exploitation rights, but this digital certificate of authenticitythat represents the work of art.

The first NFTs were generated and sold on the blockchain of the Ethereum network. This is now also possible on other blockchains.

© Nick Chong / Unsplash

Advantages and other examples of NFTs

According to digital artists like Beeple, an NFT should be understood as “a handshake agreement”. With an NFT, the artist assures the buyer that he is now the one who is allowed to show that he owns this special work of art. Even if they are pictures, videos, pieces of music or animations that can already be found on Instagram, YouTube, Spotify or anywhere else and have been copied thousands or millions of times. The best example are here Internet memes like the rain cat Nyan Catwhich was auctioned for 522,000 euros but can be found on countless websites. (Also Read: The Best (And Funniest) Sneaker Memes - And The Story Behind Them)

NFTs are interesting for artists because they give them the opportunity to offer their works directly worldwide. You can do without gallery owners. This is currently helping numerous artists to attract unexpected attention. This can be done in an NFT automatic royalties programmed. If an NFT is resold, the artist receives a percentage of the resale price - and can thus benefit from it in the long term. But not only that: NFTs can also serve as a "loyalty program". Because the digital wallet in which an NFT is located can be traced on the blockchain. Musicians can invite NFT owners to exclusive gigs or offer them limited collector's items.

However, it's not just works of art that can be sold. Twitter founder Jack Dorsey has one NFT on his first tweet created and auctioned for over 2 million euros. This is a real NFT pioneer Game Cryptokitties. Players have been collecting digital cartoon cats here since 2017. Each of them is unique. Bringing two cats together can create new, algorithm-generated, and equally unique kittens. One of them was traded for 600 units of the cryptocurrency Ether, i.e. over 900,000 euros.

Some crypto experts predict that via NFT in the future too real houses, land or company shares are traded become. Identity cards and birth certificates can also be implemented as NFTs. (Also interesting: Deutscher has lost a password for Bitcoins worth $ 220 million)

Elon Musk makes fun of NFTs with Song

Of course there is too criticism: Art historians say that the digital certificates of authenticity mean that only the potential as an investment counts, not the work behind it. The philosopher Max Haarich compared the hype with the tulip mania of the 17th century, when tulip bulbs were suddenly traded for the price of houses and accumulated by princes as status symbols. This was also done in March Tesla founder Elon Musk funny. He has announced that he will be selling a song about NFTs as NFT. In the song, potential buyers are accused of vanity. Even so, Musk were offered over two million euros. The billionaire, however, did the reciprocals. "Honestly, it doesn't feel right to sell this," he wrote. "I'll let it be." (Also Read: How Elon Musk Lost $ 27M On BitCoin Investment In Just One Week)

Another point of criticism is that NFTs consume a lot of energy. In order to verify the NFT creation and sales in the blockchain, thousands upon thousands of computers perform complicated calculations at the same time. This does not only apply to NFTs, but to all transactions that are recorded in the digital cash books. For comparison: The operation of the Ethereum blockchain requires about as much electricity as the country of Panama. Some artists have already turned their backs on the NFTs. However, the developers of Ethereum are already working on a solution that will reduce power consumption by 99 percent. Others could follow suit. This would not only make NFTs financial, but also ecological future for many artists become.

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