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<\/div>\nA digital-only artwork has sold at Christie\u2019s auction house for an eye-watering $69m (\u00a350m) \u2013 but the winning bidder will not receive a sculpture, painting or even a print.<\/p>\n
Instead, they get a unique digital token known as an NFT.<\/p>\n
Where Bitcoin was hailed as the digital answer to currency, NFTs are now being touted as the digital answer to collectables.<\/p>\n
But there are plenty of sceptics who think it is all a bubble that is going to burst.<\/p>\n
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What is an NFT?<\/strong><\/p>\n NFT stands for non-fungible token.<\/p>\n In economics, a fungible asset is something with units that can be readily interchanged \u2013 like money.<\/p>\n With money, you can swap a \u00a310 note for two \u00a35 notes and it will have the same value.<\/p>\n However, if something is non-fungible, this is impossible \u2013 it means it has unique properties so it cannot be interchanged with something else.<\/p>\n It could be a house, or a painting such as the Mona Lisa, which is one of a kind. You can take a photo of the painting or buy a print but there will only ever be the one original painting.<\/p>\n NFTs are \u201cone-of-a-kind\u201d assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own.<\/p>\n The digital tokens can be thought of as certificates of ownership for virtual or physical assets.<\/p>\n How do NFTs work?<\/strong><\/p>\n Traditional works of art such as paintings are valuable because they are one of a kind.<\/p>\n But digital files can be easily and endlessly duplicated.<\/p>\n With NFTs, artwork can be \u201ctokenised\u201d to create a digital certificate of ownership that can be bought and sold.<\/p>\n As with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain.<\/p>\n The records cannot be forged because the ledger is maintained by thousands of computers around the world.<\/p>\n NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.<\/p>\n What\u2019s stopping people copying the digital art?<\/strong><\/p>\n Nothing. Millions of people have seen Beeple\u2019s art that sold for $69m and the image has been copied and shared countless times.<\/p>\n In many cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies.<\/p>\n But the buyer of the NFT owns a \u201ctoken\u201d that proves they own the \u201coriginal\u201d work.<\/p>\n Some people compare it to buying an autographed print.<\/p>\n People are paying millions of dollars for tokens?<\/strong><\/p>\n Yes. It\u2019s as wild as it sounds.<\/p>\n READ ALSO: <\/strong><\/p>\n How much are NFTs worth?<\/strong><\/p>\n In theory, anybody can tokenise their work to sell as an NFT but interest has been fuelled by recent headlines of multi-million-dollar sales.<\/p>\n On 19 February, an animated Gif of Nyan Cat \u2013 a 2011 meme of a flying pop-tart cat \u2013\u00a0sold for more than $500,000.<\/p>\n A few weeks later, musician Grimes\u00a0sold some of her digital art for more than $6m.<\/p>\n It is not just art that is tokenised and sold.\u00a0Twitter\u2019s founder Jack Dorsey has promoted an NFT of the first-ever tweet, with bids hitting $2.5m.<\/p>\n Christie\u2019s\u00a0sale of an NFT by digital artist Beeple for $69m (\u00a350m)\u00a0set a new record for digital art.<\/p>\n But as with crypto-currencies,\u00a0there are concerns about the environmental impact\u00a0of maintaining the blockchain.<\/p>\n Is this just a bubble?<\/strong><\/p>\n A day before his record-breaking auction, Beeple \u2013 whose real name is Mike Winkelmann \u2013 told the BBC: \u201cI actually do think there will be a bubble, to be quite honest.<\/p>\n \u201cAnd I think we could be in that bubble right now.\u201d<\/p>\n Many are even more sceptical.<\/p>\n David Gerard, author of Attack of the 50-foot Blockchain, said he saw NFTs as buying \u201cofficial collectables\u201d, similar to trading cards.<\/p>\n \u201cThere are some artists absolutely making bank on this stuff\u2026 it\u2019s just that you probably won\u2019t,\u201d he warned.<\/p>\n The people actually selling the NFTs are \u201ccrypto-grifters\u201d, he said.<\/p>\n \u201cThe same guys who\u2019ve always been at it, trying to come up with a new form of worthless magic bean that they can sell for money.\u201d<\/p>\n Former Christie\u2019s auctioneer Charles Allsopp said the concept of buying NFTs made \u201cno sense\u201d.<\/p>\n \u201cThe idea of buying something which isn\u2019t there is just strange,\u201d he told the BBC.<\/p>\n \u201cI think people who invest in it are slight mugs, but I hope they don\u2019t lose their money.\u201d<\/p>\n <\/p>\n