Beyond Bitcoin by Simon Dingle

Author:Simon Dingle
Language: eng
Format: epub
Publisher: Icon Books
Published: 2022-01-15T00:00:00+00:00

​CHAPTER 15

NFTs – beyond WTF

NFTs, which stands for non-fungible tokens, had an unfortunate public birth.

On March 11th, 2021, news outlets around the world breathlessly reported the $69m sale of the artist Beeple’s Everydays: The First 5000 Days as an NFT-certified digital creation. The work itself was started in 2007. It consists of 5,000 small digital artworks, most of them depicting public figures and cultural memes, laid out as a single digital image. It is one of the highest prices paid for a piece of art in history.

Public opinion was swift and brutal. Few people knew what an NFT was. Most only knew that it was a fancy new technology that seemed to fuel shocking sticker prices for digital art, including art that seemed to some to be, er, mediocre. But you could hear disbelieving conversations at gyms, restaurants and stores for days after, not to mention flames coming out of social media. $69 million? For thousands of little digital thumbnails smooshed together into a big picture? What’s the world coming to? And who owns this company called NFT?

The Beeple artwork was not the first, but its price made it the most public. An Andy Warhol computer image from the 1980s sold for $870,000. A viral ‘Charlie Bit My Finger’ video on YouTube sold for $760,999. The founder of Twitter, Jack Dorsey, sold his first tweet for $2.9m. In 2017 a very basic digital drawing of a cat called Dragon, from the Ethereum game CryptoKitties, sold for $170,000.

Perhaps one of the oddest stunts was on March 3rd, 2021, a week before the Beeple sale, when a group called the Injective Protocol, who had bought a Banksy artwork for $95,000, attached an Ethereum-based NFT certificate of ownership to it and then burned the artwork on YouTube (with the added tension of the tiny lighter being used by the masked burner mightily struggling for a minute or two to get the canvas in flames). The NFT later sold at three times the amount of the original artwork purchase. The NFT is a secure certificate of ownership of the memory of a piece of art.

But it was only with the Beeple artwork auction one week later that the lid blew off the NFT industry, accompanied by a lot of noise from both the public square and ivory towers of academia.

What in the world was this thing, and more importantly, what did it mean for the future? And more to the concerns of this book, what does it mean for DeFi? To get to the root of this question we travel back to 2013, after Bitcoin, but before Ethereum. The original Bitcoin developers implementing the details of Satoshi’s white paper had allowed the option to provide ‘metadata’, meaning extra data besides the details of the transaction, including data about data. For instance, the very first Bitcoin block, called the Genesis block, had the following text embedded: ‘The Times 03/Jan/2009 Chancellor on brink of second bailout for banks’, the significance of which has been pored over by crypto-historians.

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