NFTs are being talked about everywhere, but not explained easily anywhere. We decided to take matters into our own hands. So, we made an episode of #TheMoneyPot where we explain the history, the current fervor, why they're likely to stick around, how they solve a genuine problem, and of course we made an NFT to help us make sense of it all.
Spoiler alert: we had too much fun with this episode and turned the podcast and its original artwork into an NFT you can bid on (all for charity).
Meet the artists who decided they would dig a little deeper to really understand the digital tokens fueling the unprecedented market boom for digital art.
NFT stands for Non-Fungible Token, unlike cryptocurrencies, which are fungible tokens. Fungible tokens, or assets, have units that can be readily interchanged, like a currency. Just as a dollar can be broken down to 4 quarters, cryptocurrencies have units. Non-fungible assets have unique properties that don’t allow for interchange without damaging the value. It would be similar to cutting up a Picasso, which would render a multi-million dollar painting worthless.
In our digital world, new digital properties are being created every day. And unlike copying a Picasso, copying digital files is widely available and doesn’t necessarily diminish their quality. So, how can you protect your ownership and the rights around your digital assets when scarcity drives the value? Never sharing it is not a real solution. Being able to “tokenize” it allows for verification of ownership and enhances the ability to sell digital assets.
But NFTs aren’t only for digital assets. Tokens can represent art, cars, real estate, trading cards, digital trading cards, gamer paraphernalia, music, and books. It can represent anything in the real world or digital world that is of value. There are even people who have tokenized themselves… but that is a whole episode unto itself.
The earliest NFTs were called “Color Coins” and were first conceived in 2012, which seems like eons ago in fintech. “Color Coins” were built on the bitcoin blockchain. It was the smallest unit of bitcoin- a satoshi- and it was connected to real world assets. There were other variations built on bitcoin, including Counterparty, a company that issued gamer assets for “Spells of Genesis”. They actually launched the first ICO.
In 2017, John Watkinson and Matt Hall created unique characters, called CryptoPunks, on the Ethereum blockchain. However, realizing that managing assets on the blockchain was difficult, they asked Alchemy, a blockchain developer, to create a platform or tool to manage the assets. What Alchemy took on as a side project 3 years ago has become a booming industry, and Alchemy’s tech is behind most NFT marketplaces today.
Following the rule of the internet that cats must be involved, Cryptokitties followed CryptoPunks. Cryptokitties is a game where people can adopt, raise, and trade virtual cats. It became so popular that it clogged the ethereum blockchain, which couldn’t handle the volume.😼
The current rage is trading cards, game cards, sports cards, memes, and some digital art. It has some big supporters in the likes of Logan Paul, Gary Vaynerchuk, and Mark Cuban. Artists of all stripes have been looking into how they might use it. As we mentioned, Kings of Leon released an album on it. Not to mention Beeple, a digital artist, was able to use it to sell his artwork through Christies for the healthy sum of $69,000,000.
While the enthusiasts admit that it feels slightly like a bubble, they don’t believe that it will burst. Only time will tell if it collapses or if it simply deflates down to a more realistic size. Either way, we have thrown our hat in the ring to see what happens. We hope you enjoy it, bid on it, and help us help others. All of our proceeds will go to a charity!