How cryptocurrency works, in a nutshell
It was 2008 when the developer Satoshi Nakamoto — likely a pseudonym for either a person or group — introduced the first cryptocurrency, Bitcoin. The first official Bitcoin transaction happened in 2010, when Florida resident Laszlo Hanyecz paid 10,000 BTC for two pizzas. Over a decade later, Bitcoin’s value hit a record high in January 2021 when one BTC became worth more than $40,000 in U.S. dollars, meaning those pizzas would cost $400 million by today’s standards
Cryptocurrency arose out of popular distaste for society’s bank-reliant money model. Essentially, it was created so that average citizens could have complete control over their funds without government interference. Most importantly, it operates on a blockchain, which eliminates double-spending. (Double-spending happens when someone copies a digital currency to use the same “token” on multiple purchases — the equivalent of scanning a real dollar bill and then printing a fake one, but far easier to get away with. Prior to bitcoin, many coders and technologists had tried their hand at an anti-government digital currency, but they failed due to issues around double-spending.)
“Currency is just one tiny little aspect of [crypto]… It’s about changing how we interact in a business setting.”
WHAT IS AN NFT? WHAT DOES NFT STAND FOR?
Non-fungible token.
That doesn’t make it any clearer.
Right, sorry. “Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.
At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs.
“The ‘Metaverse’ Component and Gamification of NFTs Will Continue to Keep Them Relevant.”
The intersection between DeFi and art could lead to the creation of new kinds of artistic work: for example, “sharing music is super interesting: taking a song and having many pieces create a different experience as a whole piece. It’s not unlike buying a series of pieces that make up one bigger piece.”
Do people really think this will become like art collecting?
I’m sure some people really hope so — like whoever paid almost $390,000 for a 50-second video by Grimes or the person who paid $6.6 million for a video by Beeple. Actually, one of Beeple’s pieces was auctioned at Christie’s,
NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork). To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original
NFTs have a feature that you can enable that will pay you a percentage every time the NFT is sold or changes hands, making sure that if your work gets super popular and balloons in value, you’ll see some of that benefit.
NFTs are much bigger than an art fad – here’s how they could change the world
NFTs create opportunities for new business models that didn’t exist before. Artists can attach stipulations to an NFT that ensures they get some of the proceeds every time it gets resold, meaning they benefit if their work increases in value. Admittedly football teams have been using similar contractual clauses when selling on players for a while, but NFTs remove the need to track an asset’s progress and enforce such entitlements on each sale.
The potential of NFTs goes much further because they completely change the rules of ownership. Transactions in which ownership of something changes hands have usually depended on layers of middlemen to establish trust in the transaction, exchange contracts and ensure that money changes hands.
None of this will be necessary in future. Transactions recorded on blockchains are reliable because the information cannot be changed. Smart contracts can be used in place of lawyers and escrow accounts to automatically ensure that money and assets change hands and both parties honour their agreements. NFTs convert assets into tokens so that they can move around within this system.
This has the potential to completely transform markets like property and vehicles, for instance. NFTs could also be part of the solution in resolving issues with land ownership. Only 30% of the global population has legally registered rights to their land and property. Those without clearly defined rights find it much harder to access finance and credit. Also, if more of our lives are spent in virtual worlds in future, the things that we buy there will probably be bought and sold as NFTs too.
