“Just setting up my twttr”: five words, posted in March 2006 on Twitter. A message that at first glance appears harmless and unremarkable, but which raises a smile when you realise that it was the first tweet posted on the social network by its creator, Jack Dorsey. These five words were sold to an entrepreneur for the modest sum of $2.9 million on 23 March at the close of a bidding war. A transaction made possible by Non-Fungible Tokens, or NFTs, a significant (r)evolution in the world of blockchain that is now shaking up the way copyright is perceived and transforming the notion of ownership.
From the surprise of the Cryptokitties to building a new model
This is one more major step in the development of cryptocurrencies, which confirms the growing importance of digital technology in our daily lives. But the principle is, in reality, quite simple: NFTs are unique tokens that cannot be replicated and which are stored on a fully traceable, transparent blockchain that makes them completely exclusive. As their name suggests, once purchased these “non-fungible” tokens cannot be replaced or copied. To better understand the NFT concept and the craze it has generated, we need to go back to the Cryptokitties phenomenon of 2017. The rarity of these little virtual cats persuaded a large number of collectors to pay top dollar for them. The most expensive CryptoKitty was sold for a mere 600 ETH, which is close to €142,000 euros.
Having remained on the back foot in the cryptocurrency market for some time, attracting less interest than Bitcoin, these new assets now seem to be taking centre stage in the crypto industry. NFTs have made the sale of digital content more widespread and have garnered interest from a range of sectors from sports and music to fast food and luxury goods. They have even made it to the New York Stock Exchange, which is expected to dip its toe into the cryptocurrency market soon by launching its first First Trade NFT.
Twitter and forums showcasing growing interest
What is the point of owning something that is exclusively digital? Specialist communities active in the “cryptosphere” would answer that the mechanism is the same as when acquiring a valuable table, while the most sceptical still refuse to admit that Bitcoin and Ethereum are indeed virtual currencies. Whatever the case, it is impossible to deny the craze generated by these NFTs. Analysis of digital conversations on Twitter shows that non-fungible tokens have been the subject of nearly 3.5m mentions and 22.4m engagements over the past year.
While the topic began gaining traction during the pandemic, an ideal environment for digital exchanges and online purchases, it really exploded in February. Between 1 and 28 February 2021, there were nearly 364k NFT hits and 3m engagements in the digital sphere, mainly on Twitter and forums. These are considerable results, which can however be qualified by the analysis of Bitcoin-related discussions during the same period, which generated nearly 3m mentions and 27.9m engagements on Twitter alone.
Fig 1: Overall volume of occurrences of “NFT” in the digital sphere (online press, social networks, blogs and forums) since March 2020.
The growing interest in this new market is fuelled by the rarity of the tokens and the playful exchanges between enthusiasts and collectors. Its success encompasses increasingly diverse kinds of people and sectors and can be seen, in many ways, as a real breakthrough for the cryptocurrency industry.
Flash trend, fashion phenomenon or blockchain revolution?
However, the frenzy invites us to rethink the issue of copyright and property rights. In the case of NFTs, the advantages afforded by digital technology could be the main flaws of these transactions. On the one hand, non-fungibility appears to be a way of putting ownership back at the heart of digital economic life, but on the other hand, it could leave authentic, unique files vulnerable to copying and counterfeiting. This raises the question of the regulations applicable to these digital transactions. How do you know if a GIF shared on Twitter belongs to someone? What is the risk for a user who duplicates an NFT asset? These questions could be answered with a clear and widely publicized regulatory framework that would take us from a sudden fad to a new, lasting business model.
Whether they represent a fad, a flash trend or a true blockchain revolution, NFTs are nonetheless exciting and demonstrate the growing (monetary) value of digital content. They make it possible to exchange all types of digital content, from a simple tweet to a work of art, and could be the future in many fields.
By Victor Ploué, Junior Consultant at Antidox