The Artist’s Roadmap To Multiple Streams of Income: Using the Internet to Maximize Your Art Career by Fahim Niaz & Liz Staley

Author:Fahim Niaz & Liz Staley [Niaz, Fahim & Staley, Liz]
Language: eng
Format: epub
Published: 2021-06-16T00:00:00+00:00

Chapter Seven

WTF is an NFT?

As of the time of this writing, NFTs are taking the online - and the offline - art world by storm. But what is an NFT, how are they beneficial to artists, should you sell them, and what impact do they have on the environment? I will try to answer all those questions and more in this chapter!

What is an NFT?

This is usually the first question. It was definitely the first one I asked when I started hearing about all this!

NFT stands for Non-Fungible Token, which is a cryptocurrency transaction with added information in the form of an image, gif, MP3, video file, or some other type of file attached to it. Each token is part of a blockchain, which is a bit like a Chain of Custody log. The blockchain shows a ledger of each transaction associated with a token and proves who owned that token before.

Blockchains contain three primary bits of information - the data of a transaction, a unique code for that transaction (like a barcode or serial number), and the code of the previous transaction. Each block points to the previous block, which is what makes a chain. These blocks are very hard to alter, partially because most cryptocurrencies use a system called “proof of work” that slows down the processing to make a block in the chain.

Let’s say you want to alter the middle block in a chain of 100 blocks. Now the data that points to the previous block’s code doesn’t match, so each block following that middle block will need to also be altered. Proof of Work slows down the processing to make these changes. Let’s say the system takes ten minutes to make each change to the blocks, so now faking that middle transaction in that 100 block chain will require 500 minutes of processing.

These cryptocurrencies also make the ledger available to everyone on the network, as a Peer To Peer system, and each time the block chain is changed it has to be verified by each user on the system. So we’d also need to get control of the majority of the network to make the altered chain. This makes these transactions very secure and difficult to fake their authenticity. There’s a lot of other technology that goes into blockchains, and it’s really easy to fall into a rabbit hole on YouTube of explanation videos, but this is a basic explanation of how they work and why they’re so secure.

Now, back to tokens! A standard token in cryptocurrency is fungible, meaning it can be traded like-for-like. If you have one token of cryptocurrency and trade it for another token, you still have one token. It’s like trading one American quarter for another American quarter. You still have a quarter and the two are nearly indistinguishable from each other.

NFTs are unique, however, and can’t be exchanged like-for-like. Trading an NFT is like exchanging your Shiny Charizard for a Blue Eyes, White Dragon (Wow, showing my age there!). They’re both trading cards, but they aren’t exactly the same.

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