A-Z on those digital NFTs
NON-FUNGIBLE tokens, or NFTs, are one of the world’s biggest internet crazes.
While some experts believe they are the future of the art and fashion world, others think investors will lose heavily, echoing the fate of those who splashed out during the dot-com boom 20 years ago.
An NFT is a unique unit of computer data stored in a piece of code called a blockchain. It can be associated with a digital asset such as a video, picture, quote or even an outfit. The fact each one has a unique signature means it is finite and can be bought and sold like real-life artwork or collectibles.
A blockchain allows cryptocurrencies like Bitcoin to exist as it records on a digital ledger proof that a token changed hands.
While each cryptocurrency token has the same value – like a £1 coin – NFTs all have different values. What they are worth is dependent on how much people are willing to spend, much like paintings or antiques.
The first known NFT was a digital graphic called Quantum, designed in 2014 by artist
Kevin McCoy and his wife Jennifer. He sold the artwork to entrepreneur Anil Dash for just £2.95 but it is now thought to be worth more than £5million.
The niche technology became more mainstream last year following a string of high-profile sales. In March, artist Mike Winkelmann, known as Beeple, shook the art world by selling his work, Everydays: the First 5000 Days, for more than £50million.
Since then artists such as David Hockney and Jeff Koons, and singer Grimes, have sold NFTs for vast sums.
Designer brands are also getting in on the mindboggling new trend, with Dolce & Gabbana, Nike and Adidas all producing clobber for the virtual world.
Each piece of clothing is sold as an NFT – or non-fungible token – which can be bought and sold in real-life like a painting or any other valuable item.
An industry source said: “Fashion in the real world might seem mad at times with some of the outfits that go for silly money, but this is a whole new realm.
“We are talking about people paying thousands for something that only exists as pixels on a screen. It is unbelievable.”
So far, D&G has auctioned off nine digital designer pieces for an eyewatering total of
£4.2million.
The lots included The
Glass Suit – a green and silver outfit which sold for £740,000, alongside a real-life version of the suit.
In March, the first virtual fashion week will be held – in the real world. And virtual sportswear is set to be big business too.
Nike has bought tech company RTFKT, recently valued at £25million, to help them create and sell virtual trainers.
And Adidas has teamed up with two companies to take their Originals range into cyberspace.
Tech consultant Grace Rachmany said: “Selling clothing in games is here to stay but I think the prices are out of proportion right now.
“A lot of people have money in cryptocurrencies that they won’t take out because they’ll have to pay tax so to them, it’s like play money.”
The surge of interest in NFTs comes after Facebook founder Mark Zuckerberg announced the future of his company lay in the “metaverse” – a virtual 3D world.
There, users can play games, shop, interact with friends and even hold business meetings wearing virtual reality goggles, if they wish.
Decentraland, which has its own cryptocurrency, recently made headlines when a plot of “real estate” sold for £1.7million.
But real-life criminals are cashing in too. Todd Kramer, of New York’s Ross + Kramer Gallery, spent £1.6million on NFT cartoon apes from Bored Ape Yacht Club, only for them to be stolen by a hacker.