What the heck are non-fungible tokens and why should you care?
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If you've watched "Antiques Roadshow" you know that an ordinary object like a comic book or a baseball card or a postage stamp can be bought, sold or auctioned for thousands of dollars — if it's rare, unique or the original.
The same thing can happen with virtual objects like digital images, videos, audio, virtual real estate, video games, even a tweet — because of something called a non-fungible token.
What is it?A non-fungible token is a digital certificate of ownership and authenticity that says you are the sole possessor of an original digital object like a GIF or a piece of digital art.
Although digital files can easily be copied and reproduced, you can prove you're the owner of the original with a non-fungible token (or NFT) because the NFT is recorded by a blockchain, a sort of digital, decentralized ledger that also supports cryptocurrencies like Bitcoin and Ether. That NFT can then be sold or auctioned to someone else.
Why are we hearing about it now?Earlier this year, an NFT of a JPG file by an artist who goes by the name of Beeple was sold by Christie's at auction for the eye-popping sum of $69.3 million.
"This is not a joke. The NFT of Twitter CEO Jack Dorsey's first tweet sold for $3 million," said Vivian Fang, an accounting professor at the University of Minnesota's Carlson School of Management. "He becomes owner of this digital tweet," she said of the buyer, comparing the purchase to buying a letter signed by Abraham Lincoln or the first edition of a rare book.
Why should you care?Fang believes NFTs became more popular in the past year as the COVID-19 pandemic forced us all to spend more time in digital spaces. As a result, everyone from artists to professional sports leagues are becoming interested in using NFTs to market their products to fans. Even Topps, the longtime baseball-card maker, is getting into non-fungible tokens, offering NFT digital collectibles based on the Godzilla movie character.
Eventually buying and selling NFTs could trickle down from high-flying speculators to everyday collectors. Someday we might be seeing people on "Antiques Roadshow" wondering how much their NFTs of digital Beanie Babies are worth.
"It very much maps to collectibles in real life," Fang said.
Richard Chin • 612-673-1775
