Whenever a work of art is auctioned for an extraordinary sum, there is always a conventional medium that shares the news with a good dose of astonishment. However, in recent times, another kind of operation involving the so-called "Non-Fungible Tokens". What is a "Non Fungible Token"? Next, we will try to explain its essence, and why some are sold for millions of dollars on the web.
Fungible...? What does that mean?
The Royal Academy defines fungible as something that is consumed with use, taken directly from Latin fungi, "to spend". But the world of economics describes a fungible good or resource as "something essentially interchangeable, and each of its parts is indistinguishable from another part". The best historical example is gold. A kilogram of pure gold is and will be a kilogram regardless of how it has been divided, and it will not lose value because of it. Traditional money is also fungible: a five-euro bill can be exchanged for another equal one, or for any combination of bills and coins up to the same value.
A 'non-fungible' good is not compatible with that definition. Think of the Mona Lisa, a classic collection car of which only one copy exists, or why not, a field. Although they can be appraised, auctioned, and acquired with money, they are not mutually interchangeable. And that brings us to the token, which in very loose terms is a form of virtual currency that resides on the blockchain and is associated with a specific resource. So...
What is a "Non Fungible Token"?
A token that represents a unique digital element, such as a work of art. Now, the token is not the work of art, but rather a certificate of ownership. And the key is that no two are alike. The basic functioning of the Internet is based on copies upon copies upon copies. When you read this text, you will receive a reproduction of thousands that the server will generate. Instead, a Non Fungible Token makes you the owner of something digital, original, and unrepeatable.
And they are paying millions of dollars for them. Why? Experts offer four reasons:
- COVID-19. Everything is virtual, everything is digital, everything is online and in the cloud. More people pay attention to virtual goods and services, and their revaluation is inevitable.
- Some 'heavyweights' entered the market, such as the auction house Christie's, Formula 1, Nike, and the NBA itself through its platform Top Shot.
- Cryptocurrencies. Their value skyrocketed in recent months, courtesy of billionaires and other mega-influencers.
- The economy is chaos, and non-fungible things provide a classic protection mechanism.
If we add the fact that anyone can enter the particular world of Non Fungible Tokens, it is not difficult to understand their explosion in popularity. Animations, drawings, selfies, audio samples, video, historical moments in a sport, special weapons and skins in video games, virtual land... if it's digital, then it can be an NFT, and it will be accompanied by a public, verifiable, and unalterable record that always confirms its authenticity.
Source: The Hustle
