Beeple

NFTs are a way of recording who owns a specific virtual good, creating and transferring virtual goods is a big part of the metaverse, thus NFTs are a potentially useful financial architecture for the metaverse. Or in more practical terms: if you buy a virtual shirt in Metaverse Platform A, NFTs can create a permanent receipt and let you redeem the same shirt in Metaverse Platforms B to Z.

Lots of NFT designers are selling collectible avatars like CryptoPunks, Cool Cats, and Bored Apes, sometimes for astronomical sums. Right now these are mostly 2D art used as social media profile pictures. But we’re already seeing some crossover with “metaverse”-style services. The company Polygonal Mind, for instance, is building a system called CryptoAvatars that lets people buy 3D avatars as NFTs and then use them across multiple virtual worlds.

What is a non-fungible token?

In economics, a fungible asset is something with units that can be readily interchanged – like money.

With money, you can swap a £10 note for two £5 notes and it will have the same value.

However, if something is non-fungible, this is impossible – it means it has unique properties so it can’t be interchanged with something else.

NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own.

The digital tokens can be thought of as certificates of ownership for virtual or physical assets.

A spacesuit with crystals growing out of it - one of the daily doodles

How do NFTs work?

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.

With NFTs, artwork can be “tokenised” to create a digital certificate of ownership that can be bought and sold.

NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.

In theory, anybody can tokenise their work to sell as an NFT

It is not just art that is tokenised and sold. Twitter’s founder Jack Dorsey has promoted an NFT of the first-ever tweet, with bids hitting $2.5m.

Images : Beeple