NFTs: the Next Step to a Digital Economy

NFTs: what, why and how does it relate to traditional economy?

It is clear that our everyday tasks and responsibilities are slowly transforming, one by one, into the digital environment. Nowadays, we shop and join school classes online or do a workout according to a YouTube video. This cultural shift, supported by technology, is also applicable to digital currencies and ownership. Take the case of the first digital-only art auction by Christie’s auction house in which the digital art was sold as an NFT.

But first, what exactly is NFT and what makes it so special? NFTs are non-fungible-tokens, meaning; it is an alternative cryptocurrency which is a unique identifier of ownership with regards to (non)material objects, and it can’t be replaced with any other token. To compare, bitcoin (BTC), Ether (ETH) or Cardano (ADA) are all fungible digital coins – if you will trade one coin for another, you will still have the same value. However, NFT tokens do not represent coins, but actual digital or physical benefits: a piece of art, music but also a simple tweet. Simply put, NFTs may be used as a means of exchange of ownership of material objects in a digital marketplace. This could help the music industry greatly, as it could solve their struggle to monetize content during the age of streaming and subsequent decline in physical sales. Moreover, the new cryptocurrencies caught an interest of investors as they can be sold and bought for a profit once the value rises. 

Besides that, the new blockchain also started to enter the more traditional art world. For instance, the online bidding by Christie’s auction house was offering digital art made by Mike Winkelmann who is known by the pseudonym Beeple. His art was sold in NTFs for $69m (€58m). According to a recent BBC article, this sale was not only the first NFT-based work of art sold by a “major” auction house, but also set out a new world record for digital art.

With such a major event in mind, one may ask the question: is cryptocurrency, such as NFT, taking over our traditional economy? And if so, to what extent does this transformation entail a dilemma? These are the topics with which the speakers were already concerned with in 2013 at the IMPAKT event ‘DIY Currencies’. The video explores the differing sides of alternative digital currencies and helps us understand better the similarities and differences between them and traditional material money! But this makes us think: with all this new talk about blockchain and cryptocurrencies, is it time for a new DIY Currencies event? What do you think?


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