What’s an NFT? And why are people suddenly spending millions on them? | CBC News
▻https://www.cbc.ca/news/business/nft-analysis-explainer-1.5933536
At first blush, Sheldon Corey’s Twitter avatar, shown above, isn’t the sort of thing you’d think is worth $20,000 US. But to the Montreal investor, it’s worth every penny — if not more.
The image is part of a collection of digital files known as CryptoPunks, which were first created more than three years ago.
Created by a computer algorithm by software developer Larva Labs, there are about 10,000 of them out there. They were given away almost for free when they were created, but over time they have come to be very valuable to a certain subculture of people because they are among the first examples of an emerging type of digital investment known as non-fungible tokens or NFTs.
While the image itself can be easily duplicated, what gives Corey’s NFT its value is that its digital ownership is unimpeachable. Logged on a digital ledger known as a blockchain that can’t be forged, the ownership can be publicly verified by anyone who cares to look, and Corey is its undisputed owner in perpetuity, or at least until he decides to sell it.
The buyer, Miami-based art collector Pablo Rodriguez-Fraile, sold that NFT this week for almost 100 times what he paid, setting what’s believed to be a new record for NFTs at $6.6 million US. To him, he was buying a valuable piece of art akin to any other works from the great masters of their day, worthy of hanging in any museum you could name.
“You can go in the Louvre and take a picture of the Mona Lisa and you can have it there, but it doesn’t have any value because it doesn’t have the provenance or the history of the work,” he said this week. “The reality here is that this is very, very valuable because of who is behind it.”
Much like conventional art, the beauty of digital art may be in the eye of the beholder, but to Fernandez the real value of NFTs is in how they can certify ownership.
She says it’s not surprising that the artistic community has jumped on board, because the conventional business model for artists and art lovers has its own set of problems. She cites the example of a New York art gallery that came upon previously undiscovered works by Mark Rothko, Jackson Pollock and others, and sold them to dozens of investors for more than $80 million.
“The ink was right, the paper was right, people that know Rothko vouched for it,” she said.
Despite the way the gallery owner obtained them being “a bit shady” and the verification of their status “super opaque”, customers couldn’t wait to get their hands on rare gems from such revered artists.
There was only one problem: they were all fake, forgeries by a talented Chinese artist. “All these millionaires, including the owner of [auction company] Sotheby’s, got scammed because in the art world, provenance is created by a consensus,” she said.
“With NFTs there is no question, it’s either there or it’s not. Period.”
Huge waste of energy
While Fernandez is one of many excited by the potential, the rise of NFTs has its fair share of critics who say it is just as much of a waste of energy as bitcoin is. Most NFT transactions at the moment are happening on the ethereum blockchain, and at current rates, the typical ethereum transaction currently uses about 50 kilowatt hours worth of energy to verify and process. That’s enough to power the typical Canadian home for about two days.
A group of artists who don’t like the rise of NFTs have created an online calculator that gives a rough tabulation of the carbon footprint of any given NFT transaction. One French artist was horrified to discover the sale of one of his digital works used more energy than his studio would use over two entire years.
She says it’s easy to think some of the assets are trivial, but so are a lot of physical collectibles. People collect high-end watches such as Rolex and save them for decades. “All that has no value to anyone who’s not into the subculture, but to whoever is in the subculture it is hugely valuable,” she said.
#NFT #Idéologie_propriétaire #Culture_numérique #Spéculation #Blockchain