Recently, the gaggle of online dictionaries that are still trying to appeal to a Gen-Z audience announced their words of the year. Merriam Webster, in their signature, dignified fashion, chose “vaccine.” Oxford English Dictionary decided to be quirky, if unoriginal, and picked “vax.” But Collins decided to stray from the antigenic path, choosing to shine the spotlight on one highly contested acronym: NFT.
Of course, this stands for non-fungible token.
Your first question is probably, “What the hell is an NFT?” I’ll tell you, but first we have to get some business out of the way. My name is Eliza, and my boyfriend is Twitter famous. And not only Twitter famous, but Twitter famous because of NFTs. Does this mean his ever-springing well of metaverse knowledge has magically rubbed off on me simply because we share spit (and a miniature dachshund)? Absolutely not. But it does mean that I’ve roleplayed sufficiently as arm candy and eavesdropped on enough late-night Discord chats enough to know my CryptoPunks from my Cool Cats. You’ll find out what those words mean in a second.
Your next question might be “Why are NFTs so expensive? Aren’t they just JPEGs? Are they a symptom of the world’s inevitable decline into the chasm of unreality?” This, my friend, I cannot answer. If you’re looking for a critical analysis of what the rise of the NFT economy means for our society, the future of paper currency, the valuation of traditional art, or humanity’s raison d’etre, this is the wrong article for you. (Although, if you are looking for that article, there’s a very good one right here.)
What I can tell you is which profile picture projects are the cutest, how the blockchain works (well, kinda), and how to manipulate the tech bros at NFT functions into buying you $14 gin and tonics. Just kidding, there are some secrets I’ll never tell. Also, I don’t drink gin.
So, what the hell is an NFT?
To understand what a non-fungible token is, you first have to understand non-fungibility. Actually, you first have to understand fungibility. If something is fungible it means it can be exchanged for its exact equivalent. For example, if you have a five-dollar bill and I have five one-dollar bills, they are effectively the same thing; they’re interchangeable. If I have five ones and you have $5 of Kohl’s Cash and you ask to trade, things start to get tricky. Once something is truly unique and not interchangeable for its exact equivalent, it is non-fungible. That something is typically digital art, but anything from music to concert tickets to tweets can be minted as an NFT.
In simple terms, an NFT is a piece of media (usually in .jpeg format, but any digital file will do) that can be verified and traded on the blockchain.
Oh god. What is the blockchain?
Okay. Deep breath. I’m going to hit this with my best shot, like a crypto-era Pat Benatar (unfortunately, sans purple tiger unitard). The blockchain is a public ledger that permanently records transactions, such as which NFTs are sold when, and to whom. Most NFTs are recorded on a blockchain called Ethereum. Because crypto doesn’t rely on banks to authenticate and mediate transactions, the blockchain is essentially people’s way of agreeing that the data they see is legitimate. The blockchain is the beating heart of a decentralized economy. Plus, it’s permanent and can be viewed by anyone—so if you buy an NFT today, your grandchildren can see the record fifty years from now. That is, if we haven’t yet gone up in a righteous blaze of smoke and flame.
How do you create, buy, and sell NFTs?
Users can upload the file that they want to become an NFT onto platforms such as OpenSea (basically, the eBay of cryptocurrency) that act as a digital marketplace; once an NFT is recorded on the blockchain, it is officially minted. NFTs are then bought and sold using cryptocurrency, most commonly ether, the currency used on the Ethereum blockchain. At the time of writing, one ether is exchangeable for around 4,000 US dollars.
Additionally, NFT buyers pay a gas fee to Ethereum miners (to learn about cryptocurrency mining, see here—it’s way above my pay grade) for verifying the transaction. This gas fee is what incentivizes the platform to keep running.
What are some of the top NFT projects?
A lot of the top (i.e. most lucrative) projects fall into the category of profile picture projects, or PFP projects, meaning that they are designed in the style of an avatar, usually with randomly generated traits of varying rarity. If you venture into the overenthusiastic wastelands of NFT Twitter, you’ll see countless profiles sporting blue cats, unimpressed-looking monkeys, moony-eyed, colorful Frankensteins, or pixellated LA types. All of these images belong to PFP or avatar projects—the ones I’ve described being Cool Cats, Bored Apes, Creature World, and CryptoPunks, respectively. Many of the bigger projects have cult celebrity followings: Jimmy Fallon, Post Malone, and Stephen Curry are Bored Apes; Shaquille O’Neal is a Creature; Mike Tyson is a Cool Cat; Jay-Z is a CryptoPunk.
Why are NFTs so controversial?
Okay, I know I said I wasn’t going to go into the sociology of the thing, but there are a few points I want to make.
First, you have to have money to crack into the NFT space and make a real return on your investment—unless you’re really, really lucky. And some people are! But crypto diehards will tell you that the space is super accessible, and though there are people working to make it so, this isn’t yet true. As with most worthwhile investments, buying NFTs takes a significant amount of cash, a cost that most people cannot endure in the face of bills and living expenses. Nothing exists without context; marginalized voices will stay marginalized even as they integrate into a radical new space.
There is a gap in the conversation about NFTs right now: people are either writing about why NFTs signify that the dystopian future is upon us, or why we should buy in right now. And both sides are extremely condescending toward the other. I’m not going to lie to you—thinking about NFTs sometimes gives me the ick. I disapprove of anything that makes the very rich even richer, and I struggle to grasp how JPEGs can have mass monetary value. But I’ve also tagged along to parties full of hopeful NFT enthusiasts who greet people they’ve just met with warm hugs and glowing smiles. Where NFTs go wrong, for me, is with the sky-high prices and obsession with exclusivity that render the community impenetrable to outsiders, no matter how welcoming it is once you’ve broken the shell. Conscientiousness is absolutely key; the enthusiasm of many emergent NFT players has the tendency to come off as tone-deaf or exorbitant in the context of economic disparity. Yes, that includes my boyfriend. Whether my reservations about NFTs can be proven wrong by the NFT sphere is up to the NFT sphere.
As with any advancement in technology or commerce that has yet proven to be necessary or beneficial, you have to make your own judgments about NFTs. Most likely, and like mine, that opinion will be influenced both by your personal politics and the convictions of the people you love. I am choosing to remain optimistic because that is all we have left. NFTs are here, and it is my deepest hope that their community will adapt to criticism and prove us all wrong.
By Eliza Rudalevige
Illustration by Eutalia de la Paz