Image Courtesy: Pudgy Penguins.io
Nigel Pereira on the NFT market which is currently valued at $35 billion and expected to cross $147 billion over the next 5 years.
While we're definitely going to get technical with this post and explain how JPEG files of funny-looking animals can sell for millions of dollars, the Beeple story is without a doubt what most people want to hear so let's get to that right away. If you were to meet Mike Winkelmann a few years ago, you probably wouldn't guess that he would soon be one of the world's top three most valuable living artists. Especially since his art isn't something tangible like paint on a canvas but rather pixels on a screen.
Image Courtesy: Beeple
5000 days and $69.4 million
Mike Winkelmann, a 39-year graduate in computer science, father of two, and husband to a school teacher had never sold a print for over $100 before October 2020 and in fact, never even used to refer to himself as an artist. However, and this is important, Mike Winkelmann decided on the 1st of May '07 to create one digital piece of art every day from start to finish and post it online, come what may, and has been doing so for the past 15 years without missing a day. This was at a time when there was no market for digital art and not a lot of incentive except the pleasure of doing what you love.
Now since we also need to explain how NFTs work in this post, we can fast forward to the fact that Mike Winkelmann is the artist known as Beeple who in 2021 put together all the pieces of art that were a product of his everyday discipline, totaling about 5000 pieces to form a digital collage. This digital collage titled "Everydays-The first 5000 days," was put up for auction at Christie's and sold for a record $69.4 million, making it not only the most expensive piece of digital artwork but also the first NFT to be sold by a legacy auction house and paid for in cryptocurrency.
Image Courtesy: Pixabay
How do NFTs work?
While NFTs have been around since 2015, it's the evolution of cryptocurrency that has really brought them out into the limelight. Imagine you're the creator of a popular meme that has gone viral and you want to sell the original copy to someone who is interested in collecting it. In a world where millions of copies of your meme already exist and anyone can copy and paste a digital file with little to no effort or consequence, how do you prove yours is the original? It's like walking into a pawn shop with Abraham Lincoln's hat and no supporting paperwork, making it just another hat.
Enter the blockchain, using the same technology that's used to validate cryptocurrency transactions around the world, you can "mint" a nonfungible token for your meme that would prove without a doubt that your copy is indeed the original. This newly minted Non Fungible Token (NFT) is a digital certificate of authenticity that will maintain a record of every transaction related to your digital artwork for as long as the blockchain exists which is basically forever. That's like walking into a store with Abraham Lincoln's hat and an authenticated list of everyone who's ever worn it, a major game-changer.
Image Courtesy: Shutterstock
So is it like copyright?
While it does sound a lot like copyright, it's actually quite different. Copyrights are usually to prevent people from using or sharing or reproducing your work without your permission but with NFTs, it's the opposite. With NFTs, you want your artwork to be shared as much as possible so that the value of your original "authenticated" copy goes up in the eyes of people who collect NFTs. That's right, NFTs get a lot of their value from popularity so in this case people "stealing" your work is actually beneficial to you and should be encouraged.
Another difference between copyright and an NFT token is the fact that copyright means you own that piece of art and can use it for commercial purposes like displaying it and charging people to view it, for example. An NFT, on the other hand, does not buy you the right to use the corresponding digital art for any commercial purposes whatsoever, and the actual copyright is still owned by the original artist. What you do get, however, is a digital asset with significant monetary potential that's easy and safe to trade, and is supported by a community of collectors that is growing larger every day.
Image Courtesy: Shutterstock
Are NFTs a bubble waiting to burst?
An important thing to remember is that NFTs are only valuable to the people who collect them and serve no purpose outside the world of digital art collectors. That being said, the NFT market is currently valued at $35 billion and expected to cross $147 billion over the next 5 years, so if it is a bubble, it's a big one with a lot of backing. In conclusion, history has shown us that people will collect absolutely anything from stamps to coins to baseball cards and even safety matches so it only makes sense that we would eventually find a way to make digital media collectible. We have and they're called NFTs.
About the author:
With a background in Linux system administration, Nigel began his career with Symantec Antivirus Tech Support. He has now been a technology journalist for over 6 years and his interests lie in Cloud Computing, DevOps, AI, and enterprise technologies.
More by Nigel Pereira:
DevSecOps: Why Security can no longer be an afterthought
DevOps: Why it is now the only way to develop software
How containers changed the way we deploy software
5G, a software-defined future
How video games changed the way we process data
Is Bitcoin backed by anything real?