What is an NFT

There is some super strange stuff happening online now and I need to tell you about it.

                Let’s look at this tweet. The first ever tweet ever tweeted was by Jack Dorsey and that tweet was somehow just purchased for $2,915,835.47.

And it’s not just the tweet. NBA sells little moments of basketball games for hundreds of thousands of dollars. These are all sorts of digital things that people are purchasing.

                There are three simple letters that you need to understand to know what is going on which are

This story is much bigger than a $600,000 cat giff, or a 3-million-dollar tweet. It’s a story about human psychology and how we value things is shifting because of technology. A technology that something may revolutionize our society and all at the same time may accelerate the climate disaster...

NFT Stands for Non-Fungible Token, But it’s not that simple…

So let’s start with Fungible

                It’s a very common word to economist with a precise definition. Let’s use another word for Fungible like Replicable. Non-Fungible Means Irreplaceable. Let’s say you want to buy an orange jacket. You go to the internet and it cost $39. You don’t care which one they send to you out of their stock. The jacket is Fungible in this case that is its replicable. But let’s say one unique orange jacket that have been with you for a long time. You feel like you have a connection with the jacket. It is the only one that exist in the entire universe and it is valuable because it is scarce, therefore it is Irreplaceable/Non-Fungible. Everything in the world is either Fungible or Non Fungible. Fungible things are more expensive and valuable.

That’s all about the NF part of it, Let’s talk about TOKEN

                Yes, it’s a very internety word. To explain this, one must understand what is called THE BLOCKCHAIN.

This is a complex term and is hard to understand but in simple terms, the Block chain is an alternative method of transaction where there is no middle man (Trusted individual or company) to ensure security, confidentiality and integrity of transactions. Unlike the banking system where the bank acts as the middle man for transactions in a Block chain, all transactions are done publicly on the internet. That is a bunch of people’s computers on the internet with each and every one of them keeping records of transactions and all.

                So what does this have to do with a 3 million dollar tweet, let me tell you. Taking the block chain and applying it to transactions of money and digital stuff does the explaining. That is, here there is the exchange of money for digital stuff and the block chain does not care why the transactions is done but only cares if the payer has enough money in his records to pay and if the buyer holds his own end of the Bargen. And that is it the digital stuff is now a Token and more precisely, a Non Fungible Token (NFT)

 

Now you may be asking. Why would somebody buy 3 million dollar tweet?

                If there is anything that gets an individual to value something, it is if a group of people validates that it is real and that it is the only one

                There are all types of Tokens in the form of Music, Short Videos, pictures, art works...

As soon as humans have enough abundance, the next frontier is to create value in things that don’t have any inherent value. That is the same thing with the art industry because, like for example because a wooden board with some ink on it is accepted by a bunch of people to have value, then it has value. The only difference is that we have tech to do it in a nonphysical way with the help of the Block Chain.

                Now why did I say this may also accelerate climate disaster. Its because the tech that is the backbone of this, the Block Chain mechanically or physically relies on computers doing a bunch of little calculations all day and night forever.

Most NFTs are stored in a block chain called Etherium. The Etherium block chain uses 33 TWH of electricity. That is the same amount of energy as the country of Serbia. A reminder that this energy comes from power plants which burn fossils. The power consumption of the etherium block chain is quadrupling over the past few months and not showing any signs of slowing down.