NFT, what non-fungible tokens are and how they work

In recent months there has been more and more talk of NFT, an acronym that means non-fungible token (in Italian, non-fungible token or non-replicable token). These are “ownership” certificates on digital works. In detail, it is a special type of cryptographic token that represents the deed of ownership and the certificate of authenticity written on the Blockchain of a unique asset (digital or physical). They are not mutually interchangeable and therefore differ from cryptocurrencies, such as bitcoins for example, which are fungible. NFTs are used in particular applications that require unique digital items such as crypto art, digital collectibles and online games. In particular, the art world is one of the first fields of use of NFT, due to its ability to provide proof of authenticity and ownership of digital art that would otherwise have had to deal with the potential of mass reproduction and unauthorized distribution. on the Web. The NFT market in the third quarter of 2021 was worth $ 10.7 billion.

How NFTs Work

As Agenda Digitale explains, the purchase of a work linked to a non-fungible token is not the purchase of the work, but the possibility of demonstrating a right to the work, guaranteed through a smart contract. It all starts with a digital version of the artwork. Usually, a digital photo or documentation of it filmed and saved in digital format is used. It is compressed into a sequence, called a hash, which is then stored on a blockchain. The use of these tokens has paved the way for an automated hash market, where the creator can use the token to add their own hash into it and then sell it in exchange for a cryptocurrency payment. Since the NFT keeps track of the hash’s sales internally, so that it is possible to trace the handshakes back to its creator, it is possible to prove ownership with proof of authenticity and ownership of the work.

Copyright and legislation

NFTs have revolutionized the field of copyright. Since their birth in 2014, they have proved to be a great novelty. In the context of NFTs, through their use, whoever buys a token does not purchase the copyright on the content that is the object of the token, but purchases a certificate that allows them to track and prove ownership of the digital copy purchased. So of itself work can be sold indefinite NFTs to different subjects, all equally owners of a single copy, but not of the original. The latter will remain the exclusive property of the author who will have the opportunity to economically exploit his work an indefinite number of times, being remunerated for the purchase of a token connected to it.

How to buy an NFT and how to invest

For the purchase you need a blockchain, almost always that of Ethereum. But lately alternative solutions such as Flow Blockchain, Binance Smart Chain, Solana, Cardano, Polygon, TRON and EOS are coming. The platforms for trading NFTs are numerous, from Open Sea to Nifty Gateway, from Valuables (for buying tweets) to CryptoKitties. There are Rarible and SuperRare specializing in artwork or Valuables for purchasing tweets. Transactions take place in almost all cases in cryptocurrency, so it is necessary to have a digital wallet (wallet) such as Metamask.

Some symbolic cases

In the ranking of the most expensive NFTs, crypto-art dominates. At the beginning of 2021 the digital artist Beeple who launched the work caused a great stir Everydays. The first 5000 days, a collage of other 5,000 works, sold by the famous auction house Christie’s for an amount of about 39,000 ETH, or over 69 million dollars, to Metakovan, pseudonym of the founder of Metapurse, the largest NFT fund in the world. In fact, Metakovan does not have the availability of the file, but to all intents and purposes he is the only owner of all the rights associated with the work ”. Among the most expensive non-fungible tokens, the first tweet in history, written by Jack Dorsey, sold for 2.9 million dollars.