The year in a nutshell: NFT
(name) acronym for non-fungible token, which creates a distinct identifier for a given asset
Any innovation whose name includes the term “fungible” can hardly be expected to attract much attention from non-geeks. And yet the NFTs accomplished just that this year.
Many have been baffled by the new technology. The explanations that poured in offered analogies to, say, certificates of authenticity or baseball cards. But, more literally, an NFT is a redeemable code. This code is attached to metadata, such as a name, image, or description. Once purchased, it becomes indelibly recorded on your own digital ID. You, in a sense, own the code.
NFTs are confusing because they are abstract. But the sums they accumulate are very concrete. Through token games, artwork, tweets and more, buyers paid the NFT Marketplace $ 27 billion in 2021. Digital artist Beeple’s $ 69 million auction of ” Everydays: the First 5000 Days “shook people’s minds in March. The work, a varied collage of the artist’s other creations, was among the top-grossing sales for a living artist.
As the money poured in, critics rallied. Why pay for a free downloadable digital image, they wondered. NFT fans fired back, calling their “right-click” detractors baffled by the distinction between owning an original and copying and pasting a facsimile. Taking a screenshot of an NFT is like taking a selfie with someone else’s Maserati, they argued. Status comes from privileged property, not from spectacle.
Staid financial types have rushed to classify NFTs as the latest speculative asset class. That’s right: The hype has overwhelmed complaints that the technology is clunky, power-hungry, and poorly scalable. Exorbitant prices, among other things, have hindered mass adoption.
But the need for digital property instruments is growing. Physical life and virtual life, far from being confused, diverge. Just like our most precious physical assets, our digital assets will need deeds. If DFTs are not the future, they could still lead us there.