Non-Fungible Tokens or NFTs

One of the side-effects of looking for a new job is the chance to review a number of new technologies as I look into positions at other companies. Recently I interviewed with a company doing non-fungible tokens or NFTs. Before my interview I researched them and even thought about creating one. I reviewed the process but never created an NFT as I didn't feel it would be worth it for me. At least not yet.

So what is an NFT? It is a unique digital file. The file can be something like a picture, movie, or audio file. Having a unique file can be counter intuitive. One of the benefits of digital files is that they can be exact copies of the original. So how do you make a digital file unique? Using blockchain technology that adds a wrapper around the file so only the proper owner can access it.

There are a number of reasons to create a unique digital file. The most common use right now is for artists to create a picture they can sell for a higher price because it is unique and nobody else can own a copy of that digital file. Sometimes artists like to do a limited run of numbered reprints and that is also possible with NFTs. Of course this means the artist cannot charge as much as the file is no longer unique.

Video games would be a great place for NFTs as you could dress your avatar uniquely and be guaranteed that nobody else will have that outfit. That is one of the reasons my resume looked good to the company I interviewed with as I have a lot of years of video game experience. The company is doing things related to enhanced experiences for entertainment. As the world has gone virtual, they are creating something similar to a backstage pass with extra content for online events. Imagine going to a concert and being able to interact with the singer or band members because you purchased an NFT. One reasons the NFT makes more sense than a special code is that codes can be easily shared where NFTs cannot. They can be resold but like a physical ticket, once the NFT is sold, the previous owner no longer has any claim to them.

NFTs are also not foolproof in the same way that art is not. When you go into a famous museum such as the Louvre in Paris, they ask you not to take any pictures. However if you brought your camera and covertly take a picture, then you can have a copy of a famous painting. There is nothing that prevents you from displaying your NFT on your computer screen and then taking a picture or screen capture of it. As with the picture taken in a museum, it will not be an exact replica of the original piece but it has the potential to be close.

Creating an NFT is a fairly straightforward process that requires you to set up a digital wallet where you can store it. It also requires you to pay some money for some entity to help verify or certify your NFT. You have the ability to specify how much you will spend for the service but not paying enough will mean a longer wait time before someone feels it is worth their computer's processing time to provide the NFT. Had the process been free, I would have taken a picture with my phone and then turned it into an NFT. Once you have your NFT there are a number of marketplaces where you can sell it. How much you sell it for depends upon the same factors for a piece of art. Being famous helps increase the price. Probably more so than having a good piece of art.

I found it interesting to see how NFTs are currently being used and can see a number of really valid uses for them. That number will only continue to grow as they gain traction. I will be interested to see what direction NFTs take in the future. Right now their uses are only limited by our imagination.