A piece of digital artwork was purchased at Christie's on May 15th for an eye-watering $69 million. However, the bidder didn’t go home with a sculpture, painting, or print.  They received a unique digital token – an NFT. NFT’s, short for “non-fungible tokens,” are taking the art and gaming worlds by storm, but what exactly are they?

What Is an NFT? 

NFT’s are collectible digital assets that hold value through cryptocurrency and represent an art form or culture. Just as art is seen as an investment that “contains” value, this also applies to NFT’s. But how exactly?

Non-fungible tokens are a type of cryptocurrency that's much like Bitcoin or Ethereum. But unlike the standard coin in the Bitcoin blockchain, an NFT is unique and cannot be exchanged for a similar one. That is why it’s called “non-fungible.” 

Unlike pure currency, NFT stores extra information, elevating it into the realm of anything. The different types of NFTs are very diverse, but they can take the form of digital artwork or even music files - anything unique that can be stored digitally and is considered valuable.

How Do NFT’s Work?

NFT’s allow a limited piece of art or collection owner to reach their audience securely and reliably without using intermediaries. While it was previously impossible to sell something like the first tweet, taco gifs, or even art on the Internet, artists and cultural institutions can now do so if they are the legitimate owners.

When somebody purchases an NFT from its creator, they gain ownership, meaning it becomes their property. After all, NFT’s are digital certificates of ownership indicating the acquisition of digital assets that can be traced back on the blockchain.

NFT’s are an attractive source of income for brands, artists, musicians: you can buy original records of some famous musicians (including on vinyl), original paintings of many world-renowned artists. And while it was expected that famous artists would receive a lot of money in exchange for their work, there are many surprising purchases. For instance, Twitter co-founder Jack Dorsey sold the first-ever tweet for a whopping $2,915,835.47.

source: Jack Dorsey, Twitter

Taco Bell also took part in the NFT race. In just thirty minutes, the company sold twenty-five taco-themed gifs.

source: Taco Bell

Bringing Crypto and Art Communities Closer

Art and culture drive innovation worldwide, and NFT’s are on a mission to push the thinking on traditional investing. NFT-based marketplaces not only allow people to buy and sell art using blockchain but they also help strengthen the art community. NFT breaks down barriers between real and virtual art, aspiring and established artists, and artists and the community.

The great thing about this new thriving type of “crypto-auctioning” is that anyone can sell an NFT. Anyone can design a work of art, transform (mint) it into an NFT token on blockchain and try to sell it on one of the many NFT marketplaces. You can even set a commission that users will pay every time they buy or resell it. 

Environmental Controversy

The NFT phenomenon, much like any other craze in the crypto world, also has its dark side. As it turns out, minting an NFT requires enormous computing power and many of the server farms where this work is done run on fossil fuels. But climate-focused artists can migrate to an alternative blockchain platform with a less harmful environmental impact. They are already finding ways to change NFT technology in other valuable ways. As technology improves, (Ethereum promises to minimize the effect of its blockchain on the climate), we can be sure that NFT’s are here to stay.

milestoneBased’s Role in the NFT World

milestoneBased will help art crypto projects utilizing NFT to find the perfect patron or investor and track the project's progress. We are focused on crypto startups that need the funding for their idea to become reality. Using our DAO smart contract, we can provide a secure and transparent platform for art enthusiasts around the globe. 

Let's find the next Banksy together!