NFTs: Art’s New Playground
Welcome to Blog Post #2. If you are interested in understanding the world of NFT’s and Cryptocurrency, this is a great starting point. I do my best to lay a framework for understanding the concepts surrounding NFT’s and cryptocurrency. DO NOTE: crypto-networks are more complicated than what I write below, this is to help grasp the concept.
Please make sure to read in the order it was written for the best understanding. I do not include a lot of details - I want this to be as introductory as I can, so let’s get started.
What is an NFT?
What is cryptocurrency and how is it involved with NFT’s?
Final Thoughts
WHAT IS AN NFT?
NFT stands for Non-Fungible Token with “Token” being a direct reference to the cryptocurrency networks and their relative ecosystems. In the next section after this one I will provide a reader’s digest version of cryptocurrency, but this section will focus on what NFT’s are to the uninformed reader.
The simplest explanation of an NFT is as follows:
A NFT is a digital asset (usually in the form of digital art) that can be tracked on a specific online network that proves its authenticity and validates its ownership. For example, I can use Procreate to draw Blue (the rabbit in my logo). I then upload that file to a specific crypto-network using one of their applications e.g. Ethereum’s opensea.io. Once I submit the file to their network, I pay a small fee, and through a series of processes we will get into later, that network now assigns that piece of digital art an I.D. This I.D. is extremely complicated and includes advanced computer math, time stamps, and multiple sources of validation. By effect it is nearly impossible to steal or duplicate this I.D. because the process is so overtly complicated and is included in the network’s public record. With this new process, the cryptocurrency community has now given artists an opportunity to sell digital artwork with built-in certificates of authenticity. The fear of immediate reproduction or reliance on “he-said-she-said” conversations to prove ownership/creative rights has diminished by a landslide.
Now onto the more complicated bits.
WHAT IS CRYPTOCURRENCY AND HOW IS IT INVOLVED WITH NFT’S?
To make this easy to follow I will not be writing about any obscure networks, “tokens” vs “coins,” or write out any logical analysis on how the networks are written. This is a macro-view of what makes cryptocurrency valuable, a general view of blockchains, and how files in these blockchains become “validated” for authenticity. Things I will NOT cover include proof of work, proof of stake, limited vs. unlimited supply, or smart contracts. I encourage everyone to research those items after reading this post.
To understand what makes cryptocurrency valuable in a “broad brushstroke” sense, we need to look into what makes ANY currency valuable. In lay terms, physical currency is made valuable for three primary reasons: each unit of currency is identifiable and difficult to reproduce (e.g. a dollar’s serial number), it is controlled by a central organization (e.g. the U.S. Treasury), and the market in which the currency is used has global value (e.g. the U.S. economy).
Let’s imagine I discover an island one day and I invite all of my readers to live with me (it’s a small island). At some point we decide we need physical currency to make trade among the island shops more efficient. We choose to make coconut dollars. But - we don’t want anyone to get greedy so we all agree that the island government of Blue will be the only entity allowed to print our coconut dollars. They will be stamped with a special imprint of Blue (our national symbol) using a tool only the government has access to. This way we can set the total amount in circulation and can rest easy knowing that they are very difficult to counterfeit (which makes them reliable). However, these coconut dollars are only valuable on our island and in our markets. If we went back to the United States to trade in our coconut dollars for U.S. dollars, we may only get 5 cents for every 10 coconut bills. From a global point of view, this is because our market is miniscule compared to the U.S. and our coconut currency does not have the same value compared to the U.S. dollar. This is how we determine global currency exchange rates.
What cryptocurrency networks have done is create a specific quantity of currencies (e.g. Ethereum, Bitcoin, Cardano, etc.) that ALL have non-reproducible identities (think “serial numbers”) that can be tracked in a public, online ledger. These crypto “coins” are simply small files with attached digital serial numbers and it is the complicated nature of these serial numbers that make them immensely difficult to reproduce and give them some sense of value i.e. rarity. The way that these files are tracked and given a complicated identity/serial number is what Bitcoin and Ethereum (among others) call a “blockchain.”
Without going overboard describing how blockchains function, the take-away is this; a person or group of people create a network that is viewable to the public that has been coded to create small files (coins). Each time a coin is made (or transferred) the network has also been coded to solve an extremely complicated computer math equation and give that coin a time-stamp. The equation, solution, time stamp, and other important information from this process are attached to that coin and all of it is recorded on the network in a “block.” When a new block is formed it is attached to the most recent previous block thus creating a “blockchain.” Each time a coin is transferred, the network combines a new equation, time stamp, etc. AND the history of the blockchain to create a new ID, which means the more transactions that occur, the more insanely complicated this ID becomes. This layering process makes it highly improbable to hack or reproduce these coins. This creates its value. Additionally, these currencies are not controlled by a government or central source, they are a code on the internet which means the majority of cryptocurrencies are “Decentralized.” I will not go into detail on the importance of decentralization but I recommend doing research, it is a large part of the community.
As this relates to NFT’s, these networks essentially allow an uploaded file (JPEG, PNG, MOV, etc.) to be sent through its network in the same fashion as the network’s relative “coin.” In doing so, this digital file now has its own equation, solution, time stamp, history, etc. and can be proven “authentic” via the public ledger found on the blockchain.
FINAL THOUGHTS
NFT’s have provided opportunities for artists that have never been seen in history. They create a global community with equal access to genuine works of art using a currency platform that is globally accessible. They provide a new outlet to introduce burgeoning artists with a miniscule barrier to entry and immediate access to a potential fan base. Now, NFT’s won’t create overnight success for every new-comer, or even promise a non-saturated environment (in fact it’s probably the opposite) - but it does create a new process for expression.
I will be the first to note that art, inherently, does not offer our communities a use-able good or a service that makes our society more efficient or accessible. Artists don’t build bridges, or weld machinery, or manage cities and governments. What artists offer is a window into our collective thoughts and opinions about the world around us. Some thoughts live on the fringes, some live in the obscure, and most live in what’s popular. I will also add (strong opinion warning) that most thoughts are fleeting and underdeveloped, which is why most art is underdeveloped, exhaustingly similar, or downright bad. But that still offers us an opportunity to see what the world is thinking and WHO is thinking it, which is valuable in any capacity. NFT’s now give us real-time access to an entirely new type of thought process that until now, required a visit to a gallery or museum. I have faith that when the hype dies down, NFT’s will bring the best of the digital art world to the forefront and give us another goal to shoot for. Until then, thanks for reading and as always, stay classy.
Blue