NFTs make no sense (and why that won't hold them back)
CNET's Now What talks to our colleague Daniel Van Boom about the mind-bending trend of nonfungible tokens.
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If you're confused by blockchain and cryptocurrency, hang on to your virtual wallet: Nonfungible tokens are the latest trend in the virtual value world and make their predecessors almost look logical.
Most people struggle with the opaque name "nonfungible token." "Pretty much every one of those words causes confusion," says Daniel Van Boom, a CNET editor who recently wrote an article titled NFTs don't make sense, but that won't stop them. "Nonfungible" means something that is unique and cannot be replaced by another one -- unlike the way a $1 bill can be replaced by any other $1 bill. "Token" refers to a digital token or certificate, not a tangible thing.
Nonfungible tokens are made so by blockchain technology, recording the owner of the NFT in an openly verifiable, immutable ledger. But that does not mean an NFT affords copy protection
"The token is essentially a certificate of authenticity," says Van Boom. "So if I buy an NFT for a tweet, the token authenticates me as the owner of that tweet," but that doesn't limit ownership of perfect digital copies of it. Computer text or files are easily and perfectly duplicated, as any computer user knows. The whole thing starts to smack of Alice in Wonderland.
Based on all this you might scoff that NFTs are worthless, but people are spending big money on them, the most famous instance of which is $69 million paid in March for an NFT of a piece of digital art by Beeple (nonetheless inserted below and replicated as many thousands of times as this page is loaded, at zero cost).
Proving that NFTs don't prevent copies, here's the digital image for which someone recently paid $69 million for an NFT proving "ownership."
NFTs are perhaps the ultimate distillation of a component of stock markets, real estate and precious metals: That something is worth whatever someone else will pay you for it.
Van Boom expounds on NFTs and the circular logic of their value with colleague Brian Cooley. Listen to their conversation in the video above.
Now What is a video interview series with industry leaders, celebrities and influencers that covers trends impacting businesses and consumers amid the "new normal." There will always be change in our world, and we'll be here to discuss how to navigate it all.