Twitter founder, Jack Dorsey auctions the screenshot of his first tweet for 2.9 million dollars. Why, because it is an NFT.
Non Fungible Token
Non-fungible tokens (NFTs) are generally created using blockchain technology, the same type used for cryptocurrencies like Bitcoin or Ethereum.
Let us break that acronym down. According to Merriam Webster, fungible is “being something (such as money or a commodity) of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account”. Another word for it is “interchangeable”.
For example, one peso coin can be exchanged with another one-peso coin because they have the same value. As long as you can use it to pay the cashier it can be any peso coin. This is often true for mass produced products like soap or paper clip since all other them have the same properties.
On the other hand, the Monalisa painting is non-fungible. It is a unique masterpiece painted by the great Italian artist, Leonardo de Vinci. It’s one of a kind and cannot be interchangeable with other paintings.
A token is a symbol or representation of an asset. It also belongs to a blockchain address. To hand over an asset on the blockchain, you only have to sign the token with your private key and send it to the other person. A private key is sort of like a password to the blockchain. As a result, the ownership of the property has changed.
So, Jack Dorsey’s screenshot of the first tweet is worth 2.9 million dollars, it is a unique digital item. Just like the Monalisa, it is only one of a kind and can not be interchange with another image file.
Second rate trying hard Copycat
How does an image file like a screenshot become unique? If you copy a file like a .jpeg or .mp3 to another location, that file is digitally identical. To make it unique, we will have to use another technology related to Web 3.0, IPFS or the InterPlanetary File System.
Will the Real XXX Stand up
The InterPlanetary File System (IPFS) is a protocol, hypermedia and file sharing peer-to-peer network for storing and sharing data in a distributed file system. You can think of it like Napster on steroids. IPFS uses content-addressing to uniquely identify each file. Instead of a file location like a URL, the file is identified by the Content ID (CID). This ID is unique because it is based on the content of the file. In fact, if the content changes, the CID also changes making it tamper proof.
Another way to look at CID, it is analogous to an official receipt issue when you buy a painting. The receipt is a legal document like a certificate of authenticity that proves you bought an original painting.
Even though there have been scams and frauds surrounding the NFTs, the market is still around and strong. Originally NFTs are used for digital art, games, music and films, it is increasingly used for other applications like for documentation and legality.
