What Are NFTs?

NFT stands for “non-fungible token”, a relatively new technology at the heart of the rapidly expanding art world. Think of it as a digital certificate of authenticity and ownership that can be applied to anything from a digital image to a poem to a real-world asset, like a painting. Like with a painting, NFTs can be bought, sold and collected.

What does non-fungible mean?

“Non-fungible” means that the item described is unique and cannot be replicated. In an art context, a print is fungible as it can be replicated and traded like-for-like. The original oil painting is non-fungible as it cannot. 

In the case of NFTs, it means that there is no way someone can fake, replicate or steal your digital certificate of authenticity and ownership. 

Why do we need NFTs?

For a long time, the digital art world has had a problem: digital artwork can be duplicated and there is no way to tell who owns the ‘original’. NFTs provide a way of overcoming this. Many people may possess the artwork, but only one has the token, the NFT, and therefore irrefutable ownership.

This means that for the first time these assets can be traded and collected in the same way as physical art. 

So it’s just for digital art?

Whilst NFTs are most commonly associated with the world of digital art, you can technically create, or ‘mint’, an NFT for anything. Because the NFT isn’t the ‘thing’ itself but, instead, a certificate of ownership of the ‘thing’, people are coming up with increasingly creative ways to utilise NFTs: music; written work; collectables. Former Twitter CEO Jack Dorsey even sold his first tweet as an NFT for nearly $3 million.

How do they work?

NFTs are created by blockchain technology. Think of it as a secure digital ledger that uses complex maths to make it unfalsifiable and unalterable. When you ‘mint’ an NFT, an entry is made in that ledger that remains there forever. Likewise, when you sell or buy it’s all captured in the ledger so for anything on the blockchain you have an inarguable record of ownership and provenance.

Do I need to know about cryptocurrency to buy NFTs?

No. It’s true that most NFTs are currently bought using cryptocurrency rather than pounds and pence. This is because in the same way NFTs are recorded in the blockchain ‘ledger’ so too are cryptocurrency transactions so the two are natural bedfellows. But because of the current volatility of cryptocurrencies, there are plenty of exchanges now offering the ability to buy NFTs directly, without first having to open and digital wallet and fill it with cryptocurrency.

What is the metaverse?

Think of the metaverse as the internet but in 3D. It’s a virtual reality world built on the internet, connecting people all over the physical world, digitally. Why is it important? The metaverse provides a place for creators to display and share their digital art. Think digital galleries, exhibitions and events, all complementing their physical world counterparts. 

What do NFTs mean for collectors?

An exciting opportunity to get involved in the world of digital art for potentially the first time. Whether you are looking for a piece you love or are buying as an investment, you are now able to buy, trade and sell digital art pieces in the same you would physical media.

What do NFTs mean for the art world?

NFTs open the door for exciting new disciplines and media within the art world. Galleries, museums and auction houses can now include the work of digital artists alongside their physical works.

At LSG we are really excited about the possibility this brings. Over the coming months, we will be introducing new and exciting ways to experience art alongside our core physical offering.

Become a member now for free and we will make sure we keep you updated.