Exploring New-Gen Digital Collectibles: What Are NFTs, And Why Do They Cost Millions?

NFTs (crypto non-fungible tokens) first appeared in late 2017. Remember the CryptoKitties game, where players collected, bought, and bred cats? Each of those had a unique token behind it, along with a record in the blockchain.

As it turns out, NFTs can be used for much more than virtual pet breeding. They help prove ownership of a file, be it a photograph or a painting, audio or video recording, in-game item or a document, even a line of text – basically, any kind of virtual property. The author can set the rules of how the file is used or get a commission each time it’s reproduced: in other words, it works pretty much in the same way a contract would.

So it’s no wonder NFTs are becoming the next big thing in crypto and digital, as people try to tokenize everything from memes to real artworks. In February, the gif of Nyan Cat was sold for more than $500,000. Then, in March, “The First 5000 Days” by Beeple became the first digital artwork to be sold by Christie’s auction house, making $69 million. As I am writing this, Shanghai’s JinArt Center in Beijing holds the world’s first NFT exhibition, hosting 20 works of high-end artists in this space. Well, that’s more than enough to get plenty of attention from investors and the broad public.

As the hype is brewing, some companies develop curious use cases of NFT on the verge of real and digital. Nike, for one, has patented a method of tracing the origin of their sneakers through unique tokens. Besides a real pair of shoes, their customers would get a virtual one – along with a guarantee of their authenticity.

Whether NFTs will stay around for long, remains to be seen. However, this technology has all the potential to transform services like image stocks and music platforms and, as we see by Nike’s example, offer brands novel ways of interacting with their customers.

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