(noun) acronym for non-fungible token, which creates a distinct identifier for a given asset
Any innovation whose name includes the term “fungible” can scarcely be expected to garner much non-geek attention. And yet NFTs have accomplished just that this year.
Many were bewildered by the new tech. The explanations that poured forth offered analogies to, say, certificates of authenticity or baseball cards. But, most literally, an NFT is tradeable code. That code is attached to metadata, such as a name, image or description. Once it is bought, it becomes indelibly registered to your own digital ID. You, in a sense, own the code.
NFTs confuse because they are abstract. But the sums they rack up are very concrete. Across tokenised games, art, tweets and more, buyers poured $27bn into the NFT market in 2021. Digital artist Beeple’s $69m auction of “Everydays: the First 5000 Days” rattled minds in March. The work, a variegated collage of the artist’s other creations, was among the highest-grossing sales for a living artist.
As the money flowed, the critics rallied. Why pay for a freely downloadable digital image, they wondered. NFT fans struck back, tarring their detractors as “right-clickers” baffled by the distinction between owning an original and copy-pasting a facsimile. Screenshoting an NFT is like taking a selfie with someone else’s Maserati, they argued. Status comes from privileged ownership, not spectacle.
Staid finance types rushed to classify NFTs as just the latest speculative asset class. True enough: hype overwhelmed complaints that the technology was clumsy, energy-intensive and poorly future-proofed. The outrageous prices, among other things, stood in the way of mass adoption.
But the need for instruments of digital ownership is growing. Physical and virtual life, far from merging, are diverging. Just like our most valuable physical possessions, our digital goods will need deeds. If NFTs are not the future, they still might lead us to it.
