NFT’s, What Are They?
by Luke Rapallo ‘24
Recently there has been a lot of buzz going around on the internet about NFTs, which may leave a lot of people wondering, “What are they?”, “How are they used?” And most importantly “Why should I care?”. Well for the first question, NFTs stands for “Non-fungible tokens” Now typically that answer leads to more questions like “What does fungible mean?”. Well, Merriam Webster defines “fungible” as “being something (such as money or a commodity) of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account” in other words interchangeable. So being non-fungible means that this is an irreplaceable digital possession. In simpler terms, it allows you to “own” something that is entirely digital. For example, anybody can look at an image online, but if you have the corresponding code for that image, you can verify it is yours, and that allows you to buy and sell these codes like any other object. While discussing the appeal of NFTs, Mr. Tang said “Some people have compared it to getting a Topps baseball card from 1938 when they were founded. It's definitely tempting to spend thousands of dollars on a collectible that theoretically could be worth millions in the future.” Recently NFTs have had a huge boom online leaving the internetand the world wondering how NFTs will impact the future.
The most popular example of an NFT in recent months is a piece of digital artwork called “Everydays - The First 5000 Days”(pictured below) by a Twitter user named @beeple. It recently sold for $69.3 million. This is the most expensive NFT ever sold, and believe it or not, bidding began at only $100. This is just the largest example, there are thousands of other NFTs being bought and sold on a more regular basis for more regular prices, including an NFT that is an image of the first tweet on twitter titled “Setting Up My Twwtr.” which sold for around $3 million. This has sent shockwaves throughout the digital art community, leaving many wondering if NFTs will provide new income opportunities for primarily digital artists, making it easier to sell their works over the internet. While talking about the effects of NFTs on art, Mr. Tang said “I think it's good that digital artists can get paid more fairly for their work, but I think you'll find a lot of artists will tell you it's not really about the money. In fact, there have been a number of artists who have sworn off using NFTs due to the environmental concerns.” This shows just how large NFTs were getting, however this has sparked a debate, one that asks the question “Do you truly have ownership over those images if all you have to show for it is a code?” There are two side on this issue, the first camp believing that no, you don’t truly own an image if you don’t actually have a way of showing it other than a code, the other camp saying that as long as people think of it as ownership, and are willing to pay for it, it has value. However, there are signs that that belief is diminishing quickly, resulting in an NFT crash.
There is evidence to show that the markets for NFTs are slowly crashing, and that they were nothing more than another economic fad. According to NonFungible.com, a website used to track the NFT market, NFT sales have dropped from 44,000 sales in late march to 26,000 in early april. Furthermore, according to Yahoo finance, the price of the average NFT has dropped from $19 million to $3 since March 25th. This could indicate that interest in NFTs are dying down. Using Google Trends further reinforces this theory, as the spike in search traffic around NFTs is dwindling very quickly.
NFTs are one of the most enigmatic economic trends in recent years. Not only are they difficult to comprehend conceptually, but the economic repercussions could be mind boggling as well. NFTs have the potential to revolutionize the economic landscape on the internet, along the way helping many digital artists support their careers, however they also have the potential to be forgotten in a couple months. The only way we can truly know the future of NFTs is to wait and see for ourselves.
P.S. During the writing process of this article, an NFT of “disaster girl” sold for half a million dollars!