What are NFTs and should you care?
The world of cryptocurrency can be confusing and overwhelming but it doesn’t seem to be going anywhere, and you might have been hearing more and more about non-fungible tokens.
Josh Sandhu is the co-founder of Quantus Gallery (quantusgallery.com), an NFT art gallery in London, and here answers the most common questions...
What are NFTs?
“An NFT is a digital certification of authenticity and ownership,” explains Josh. “In effect, an NFT is a vehicle – attached to it is a bit of media. That can be anything – a bit of art, music, it could even be a ticket to a concert.”
It can get confusing because it’s not a physical object – instead, Josh says: “Technically it is cryptocurrency, it’s a token.” Many of the most popular NFTs are run on Ethereum – a blockchain.
“Blockchain is sort of a digital ledger, a database that can’t be altered,” explains Josh. The most common use is recording cryptocurrency transactions, like a decentralised bank system no one can mess with. The ‘non-fungible’ part means it’s unique – when you own an NFT, you have the only one.
How are they mostly used?
“The most obvious use case is digital art and collectibles,” says Josh. Highbrow auction houses like Sotheby’s and Christie’s have started selling NFTs – in March 2021, Christie’s sold a piece called Everydays: The First 5000 Days by Beeple for $69,346,250 (£58 million).
“If we’re talking about the art market, the easiest way to liken it is to those certificates of authenticity that come with a tangible piece of art you purchase, where it has the provenance and it’s authenticated by the artist,” says Josh.
Are there any concerns with NFTs?
“You hear common objections, like: ‘Can’t I just print screen, or right-click and save one of those JPEGs?’ It’s true – you can,” says Josh. “But the whole purpose of the NFT is it proves you own something.
“Banksy did an NFT of one of his works. There could be myriads and myriads of copies, but only one of them is going to have this certificate of ownership – by means of the NFT.”
Another issue often raised is how quickly the industry is expanding. Some NFTs are getting sold for extraordinary prices, and there are worries it’s not sustainable, and the NFT bubble might burst.
How do NFTs affect regular people?
NFTs might make headlines when they’re sold for outrageous prices, but that doesn’t mean they’re only for billionaires and celebrities.
“Especially since the pandemic, more and more things have moved into the digital realm,” Josh says. “That’s not to say it’s going to take over everything, but it’s getting more and more widely adopted” – citing things like virtual reality and the metaverse – “it’s part of this whole ecosystem that’s being built”.
He suggests people should pay particular attention to blockchain, because it could become the underlying technology for a lot of things – “whether people realise it or not”.