Every generation has waves of new media technology that appear and change how we consume films, music and TV shows. Some of these technologies were wildly successful like the iPod that allowed you to hold thousands of songs in your pocket at any one time, rather than having shelves and shelves of CDs. Others were.. less successful (Mini-Disk and Betamax we’re looking at you).
There has always been a period after the launch of a new technology in which it could land firmly in history as a game-changer, or fizzle out and only feature on internet lists of technology that could have been something if things had been different.
Non-Fungible Tokens (NFTs) have been around since 2017, but are quickly gaining attention as a number of popular musicians and public figures begin to take advantage of the technology. Last week, Kings of Leon were the first band to release an album as an NFT, but the list of NFT users is huge and constantly growing, from the first tweet ever being sold by Twitter CEO Jack Dorsey recently for $2.5 million, to Grimes selling $6 million of digital art.
NFTs are clearly lucrative, but what are they?
Here’s where it gets a bit complicated. A Non-Fungible Token is a form of cryptocurrency asset, much like their counterpart ‘Fungible Tokens’. The difference is that Fungible (spendable) Tokens (a bitcoin for example) can be exchanged for another bitcoin, but NFTs are unique and more like trading cards or collectibles. They are stored on the blockchain (a digital record of transactions that holds up cryptocurrency) that can be traded for something else unique or sold onto collectors for whatever their value is in the market. Simply, it’s like having a digital version of a first edition Charizard Pokémon card that’s kept in secure online storage, but can be sold to another user for real monetary values that increase with rarity.
In the case of Kings of Leon, when you buy the NFT token of their new album you’ll be able to download the album and exclusive artwork as much as you like and once the token is taken off sale, no more will be made and your token can’t be duplicated. This is where the rarity comes in. A creator could only make one token, sold to the highest bidder which then increases in value over time as demand grows for the rights to the token.
At the moment the technology is still in its early stages and as time moves on, NFTs will become easier to understand and will have a wider user base with more varied content. The concept is exciting for the creative industries, as it represents another way that creatives can bring in money and it could promote a wider investment as collectors look to tokens that will bring value through rarity and demand, much like physical art can earn millions of pounds as investors buy pieces for their personal collections.
There’s still a lot to work out here and as you can probably tell, understanding non-fungible tokens is complicated enough before you even get into buying or creating one. There are a few guides out there that have more details about what an NFT is and how to get involved in the market, but it’s still early days. Only time will tell if this technology becomes a leading way to make collectible digital art, or fades quietly into the past.