What Are Non-Fungible Tokens?

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In recent months, NFTs seem to have exploded in popularity, with hundreds or thousands of users flaunting their Bored Ape profile pictures, or their cool Fishman Labs NFTs. This can leave crypto newbies wondering: What exactly is an NFT, and what’s so special about it?

By definition, non-fungible tokens(NFTs) are exactly what their name means. It is non fungible, which means that it is unique and irreplaceable, and it is a token stored on the blockchain. For a simple way to learn about NFTs, watch Johnny Harris’ video here, which does an excellent job at explaining NFTs using real life examples.

A Brief History of NFTs

While NFTs gained traction in the mainstream media when a Malaysia-based businessman purchased the first Tweet in existence, tweeted by Twitter co-founder and CEO Jack Dorsey. However, unlike what most people think, that was nowhere near the first NFT ever created. According to Wikipedia, the first NFT created was Quantum, created in May 2014 and subsequently registered and sold on the Namecoin blockchain for $4. The first NFT project followed soon after as Etheria, which was launched and demonstrated at DEVCON 1 in London in October 2015, 3 months after the launch of the Ethereum blockchain. Surprisingly though, most of Etheria’s 457 NFTs actually went unsold for years until March 2021, when public interest in NFTs was reinvigorated, partially due to the Twitter NFT. The Etheria NFTs were sold at 1 ETH each due to their hardcoding on launch, which was worth $0.47 at the time of launch but later sold for a total of $1.4m.

NFTs really only started picking up in 2017 when the online game CryptoKitties monetized themselves by selling tradeable cat NFTs, with their success bringing some public attention to NFTs. In the same year, various NFT projects were launched, including Curio Cards and CryptoPunks, which also helped the term “NFT” itself gain popularity. Since then, NFTs didn’t really explode in popularity until 2020, when it’s market value suddenly skyrocketed to $250m, with the NFT momentum carrying on well into 2021. The popularity of NFTs was further boosted after art auctions and a number of high-profile NFT sales, such as Everydays: The First 5000 Days by Mike “Beeple” Winkelmann, which was minted in February 2021 and sold for a whopping $69.3 million. This beautiful collage showcased Beeple’s earlier artworks and outlines his development as an artist.

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The Present of NFTs

In its early days in 2017, NFTs served mostly as a showcase of the blockchain technology, how it could encrypt something other than numbers in the form of tokens and coins, and serve as a proof of ownership of a certain non-fungible token such as artwork and images. Nowadays however, it seems that everyone wants in on the NFT hype, with new NFT projects springing up by the day trying to get users to mint their NFT for a quick profit. Even the NBA is in on the NFT bandwagon, with the basketball association releasing NBA Top Shot, a series of the NBA’s best and most memorable moments minted into NFT packs for you to buy.

NFTs seem to have lost its glamour as a way to buy a one-of-a-kind token(although technologically it is still unique) and more and more projects seem to be the same general theme, with minor tweaks here and there to make it unique. While we won’t be naming any projects(for obvious and legal reasons) specifically, there does seem to be an increasing distaste towards NFTs, with many non-crypto users citing that one shouldn’t have to pay so much for a picture. Some have even raised questions on screenshotting NFTs to “own” the picture without having to pay sky-high prices for them. This does beg the question:

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What Do I Own As An NFT Holder?

While some have mocked NFT owners for not simply screenshotting an NFT’s PNG, screenshotting NFTs are actually (largely) illegal. While the terms of ownership and rights of use vary with each artist and project, most of the general public seem to forget that the images featured in NFTs are still created and owned by an artist(until it’s sold anyway), which actually makes it protected under copyright and fair use laws, the same as if I was to use someone’s image of a beautiful sunset without their permission. Even if the artist doesn’t own the rights to his own artwork as it may have been handed over to the NFT project in the commissioning agreements, that still means that the NFT project managers own the artwork featured, and doesn’t make NFTs royalty free.

There was a meme circulating about a Twitter user fuming over another user screenshotting his NFT and threatening legal action that has since been used as a cheap way to poke fun at NFT owners. However, the user was technically right as he did gain ownership of his NFT when he purchased it. As such, he would’ve been fully in his right if he chose to pursue legal action against people who screenshot and use his NFT without his permission, even though realistically it would’ve been way too troublesome and costly to.

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Given all these headaches of owning an NFT, why then do people still buy NFTs? Learn more in our next blog post, or check out other blog posts here!

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