Non-fungible token: behind this somewhat barbaric term hides a blockchain feature that has been bringing in thousands of dollars to certain artists for some time. Enough to whet the public’s curiosity in recent weeks, which in turn leads to the sudden popularity of these somewhat peculiar cryptoassets. If these have obvious applications in the art world, the idea applies today in various fields, ranging from video games to the sports sector.
NFT: what is it?
NFT is the abbreviation of the English term “Non Fungible Token”, which means in French “Token non fungible”. A token (or “token”, according to the translation recommended by the French language enrichment commission) is a digital asset issued by a blockchain. Bitcoins, the ether of the ethereum blockchain, or even the XRP of the Ripple blockchain are all tokens. One of the specificities of these tokens is their fungible nature: this term refers to the fact that one bitcoin is equivalent to another bitcoin and that in principle, nothing distinguishes them between them. This is a characteristic of money, and one of the arguments put forward by those who consider cryptocurrencies to be quite comparable to traditional money.
But this is not an obligation: a blockchain can entirely issue non-fungible tokens, i.e. digital assets each with unique characteristics, and which therefore cannot be exchanged against each other. ‘other.
Is it a novelty?
Not exactly. The concept of a non-fungible token appeared on an experimental basis in 2015, with the Etheria project. This offered users to acquire a parcel of a virtual world, the characteristics of each parcel being stored on the ethereum blockchain. This first experimental project at the time laid the groundwork for NFT, using the blockchain to record the ownership of virtual objects and transfers of ownership between different users.
If the Etheria project served as the first proof of concept, it will take two years before the NFT emerges in its modern form, supported in particular by two projects: the Cryptopunks project, and that of the CryptoKitties. Cryptokitties was the first NFT project to have achieved significant success at the time: it offered users the opportunity to collect virtual kittens, each kitten being represented by a non-fungible token containing its different characteristics. The success of the project, developed by the Dapper Labs studio, caused congestion on the Ethereum blockchain in December 2017 and prompted the founders of the project to develop another dedicated blockchain.
Driven by these first successes, the creators of the Cryptokitties proposed a new token standard, ERC-721, which defines the main characteristics of this new kind of token: non-fungible and indivisible. This standard, backed by the ethereum blockchain, was quickly adopted by other players, who offer their own versions based on different blockchains as needed. And a whole market has taken hold of these tools to develop their own NFT applications over the past four years.
Why is everyone talking about it?
The answer is short: because there is a way to make money.
The digital art market sees in the use of these non-fungible tokens a means of solving the thorny question of art in the digital age, by automatically replacing the precious certificate of authenticity of a work of art.
Artist Mike Winkelmann saw one of his digital works sold for $ 69.3 million (in cryptocurrency) at an auction at Christie’s in early March. But at this price, buyers do not leave with a simple USB key containing a copy of the work in question: it is rather the unique token corresponding to this work, and which certifies that its owner is indeed the legitimate owner of the work.
Several specialized platforms have opened up in recent years in order to exploit this vein: they offer artists to upload their virtual works and generate a non-fungible token corresponding to the work in question. This can then be bought by interested parties, resold, donated and can give rise to speculation. It can even be stolen from you, like any digital asset, and resold at low cost to unscrupulous buyers.
In addition to artists, many sectors of activity see this technology as an opportunity: the video game industry did not wait for the appearance of the NFT to trade in virtual objects, but the use of a blockchain. eliminates the central role of the game publisher in virtual object transactions. In the field of sport, the NBA has also decided to offer a digitized version of its collectible cards by launching an NFT platform, developed in partnership with Dapper Labs, and which offers a virtual equivalent of its collectible cards in the form of non-tokens. fungible. The case would have brought in nearly $ 240 million in revenue in 30 days, with publishers and the NBA remunerating themselves through commissions on transactions and the edition of new cards.
And the planet?
Among the many criticisms leveled at NFTs, those relating to the impact on the environment are the most frequent. As is often the case with blockchain applications, the impact on the environment is one of the subjects on which the shoe pinches. Many blockchains, including those of bitcoin and that of the Ethereum project, rely on a validation system known as proof of work, which consumes a lot of electrical energy to validate its new blocks. If some projects aim to evolve the protocol in order to switch to validation models that are less expensive in computing power, it is quite reasonable to consider the blockchain sector as an unnecessarily energy-intensive sector. The debate has animated the entire sector for several years, and NFTs are obviously no exception.