Dounya Iddir

The digital world: NFTs

History of NFTs

First called “Monetized Graphics”, non-fungible tokens had a whole different purpose when they were created. Indeed, with the expansion of the Tumblr platform in 2014, allowing users to share their photographs, texts, and artistic creations online, American entrepreneur Anil Dash as well as digital artist Kevin McCoy tried to put a system in place allowing some control over publications, particularly to protect them against plagiarism. A few years earlier, a cryptocurrency called NameCoin allowed the existence of a domain registry, which gave them the idea to develop as similar thing in the artistic world, collecting data in transactions. Now, a cryptographic token is attached to a digital work for its authenticity.

Over the years, their existence is more and more esteemed, but the “Nifties” experienced their greatest progress in 2017, notably with the creation of CryptoPunks, which are very popular today. CryptoPunks are NFTs represented by 10,000 unique 24×24 pixel characters. When they were first launched, they barely had a cost: the buyer only had to pay the $8 transaction fee, but their high demand now accounts for their dramatic increase in value, proven by more than $360 million in sales volume. The development of NFTs also saw growth when a virtual cat collecting game, CryptoKitties, was introduced in 2017, allowing users to create unique creatures from those already acquired. It is therefore following this success that NFTs had the chance to be standardized in the ERC-721 standard of the Ethereum Network, in which there are unique and non-interchangeable tokens.

Figure 1 : CryptoPunks, created in 2017, were designed in 10,000 different patterns, each represented by a 24×24 pixel image. From Journalducoin.

Thus, the NFT, or the non-fungible token, represents a unique digital object. This type of cryptocurrency uses blockchain technology, allowing information transparency and ensuring security in transactions. An analogy to understand this concept is banknotes: any banknote can easily be mistaken with another one having the same value, since they are identical and do not necessarily have characteristics that make them unique. That makes them fungible objects, unlike NFTs. This uniqueness therefore allows non-tangible tokens to have an enhanced subjective value, especially since they are more secure and have less risk of being altered than a physical object.

Where to get NFTs?

In the last few years, many NFT exchange platforms have been developed. They have therefore not only enabled the acquisition of virtual works, but also concepts such as tickets for events, currency in games, and surprisingly, the appropriation of “tweets” and videos. The most famous platforms are OpenSea, Nifty Gateway, SuperRare and Rarible.

OpenSea, created in 2017, not only allows NFTs to be traded, but also allows anyone to create  and sell them. Obviously, not all creators are known to buyers, which is why the concept of “Lazy Minting” exists, allowing them to market themselves without having to incur exorbitant fees. While this initiative is seen as ideal for emerging content creators, it can be seen as a doorway to a market overwhelmed by superfluous tokens.

Exchangers and buyers are also very active on instant messaging applications like Discord and Telegram to discuss new releases and to promote their acquisitions, especially when they wish to resell them at auction after some gain in value.

How to get NFTs?

NFT transactions are very straightforward. In order to obtain NFTs, a buyer must first create a digital wallet on one of the platforms mentioned above. OpenSea, for example, uses Ether as a currency, which must be acquired in order to be able to carry out any transaction. The buyer, then, only has to browse through the galleries of digital elements, like on an online website, but with Ether as the method of payment, with a transaction tax, called the gas tax.

The future of NFTs

Nowadays, there have been some staggering sales, such as Beeple, a digital creator, who sold an artwork, The First 5000 Days, for $69 millions. The next few years are therefore promising. Everything now depends on how it evolves, but it seems like it has what it takes to make it through the cryptocurrency world.

Figure 2 : Mike Winkelmann, a digital artist, known as Beeple, sold his work “The First 5000 Days” for $69 million a few months ago. From BBC.

Word bank

Ethereum network:

The Ethereum network is a private network with nodes that are not connected to a public or main network.

Subjective value:

In economics, the concept of subjective value states that an asset has a greater subjective value when it is scarce and useful.

Lazy Minting:

“Lazy Minting” is a concept that avoids costs for creators, passing them instead to the buyers. Therefore, creators are encouraged to publish their NFTs.

Gas tax:

Gas in the NFT domain is a virtual unit in the Ethereum Network to cover transaction costs. This unit is expressed in Gigaweis, just as the smallest unit of bitcoin is expressed in Satoshi.

Références

NFT School. (2021) Lazy Minting. https://nftschool.dev/how-to/lazy-minting/

De Beauchesne, Q. (2021) NFT Month – Chapitre II : Histoire des NFTs. https://ownest.io/news/nft-month-histoire-nft#:~:text=Les%20premiers%20%22NFTs%22%3A%20Etheria,on%20veut%20de%20mani%C3%A8re%20d%C3%A9centralis%C3%A9e

Renaud, H. (2021) Les NFT CryptoPunks fêtent leurs 4 ans – Une histoire remplie de rebondissements. https://journalducoin.com/actualites/nft-cryptopunks-4-ans-histoire/

Portail Crypto. (2021) Guide du débutant sur les NFT: tout ce qu vous devez savoir. https://portalcripto.com.br/fr/guia-para-iniciantes-em-nfts-tudo-que-voce-precisa-saber/

Top hébergeur. (2021). Comment acheter et vendre des NFT. https://www.top-hebergement.net/comment-acheter-creer-vendre-des-nft/

Lars, L. (2021) Qu’est-ce que le gas (ou le gaz) sur Ethereum https://cryptoast.fr/gas/

Gompertz,W. (2021) Everydays: The First 5000 Days-Will Gompertz reviews Beeple’s digital work. https://www.bbc.com/news/entertainment-arts-56368868