There is something strange happening on the Internet. The first Tweet posted by Jack Dorsey is the first tweet ever posted on Twitter. Someone bought this tweet for 3 million USD.
Not only Tweets, in March 2021, a jpeg created by digital artist Beeple was sold for 69 million USD by Christie’s auction house.
NBA is selling collectible moments “NBA Top Shot”. For example, LeBron James’s jump shot can be sold for thousands of USD.
People are now spending a lot of money to purchase all kinds of digital items. To understand what’s happening here, you need to understand 3 simple English alphabet that is “NFT”
The term “NFT” Article
This is a story about human psychology. Because of technology, there’s a shift on how we value things. The term “NFT” stands for Non-Fungible Token. Ok, that’s it. We have already covered everything about NFT.
“Non” means not or no. “Fungible” means interchangeable. It’ a commonly used word by Economist. It has a very precise definition.
The synonymous of fungible is replaceable. If we use the word “Replaceable” to replace “Fungible”. Non-Fungible means Non-Replaceable.
Here’s an example, imagine you want to buy a white shirt in Uniqlo. When you arrived at Uniqlo, you don’t care which white shirt to grab. Because white shirt is fungible and replaceable. As long as the shirt you get are identical to the other shirts. The shirt to you will simply be the same, they are replaceable. However, let us talk about this specific Uniqlo white shirt. It has been with me for a very long time. I love it, I especially love the color is not pure white and those special crease mark. I feel like when I wear this, it secures my self-identity. It gives a sense of feeling that’s down-to-earth and smart-casual in the same time. If I go to Uniqlo and pick up the exact same white shirt. They will never be the this white shirt. Because this shirt is non-replaceable. It is the only one on the entire Earth. It carries emotional value and has important meaning. Also it’s scarce. There’s only one in the world, at least to me it is valuable.
We can give another example to explain this concept. The $100 note can completely be exchanged with someone else’s $100 note. Because this $100 is replaceable and fungible, but if the $100 note in my hand has a celebrity’s signature. Then my $100 note is non-fungible, it could worth a lot of money.
In economic, everything can be categorised into 2 groups fungible and non-fungible. A bottle of distilled water, a can of coffee they are fungible. You just want a bottle of water, you don’t care which one. Van Gogh’s The Starry Night is non-fungible. It’s the one and only one. It’s not hard to imagine, non-fungible items are more valuable than fungible items. This is the “NF” in NFT, Non-Fungible.
Now let’s move on to the “T”. T stands for Token. Token means the coin created based on blockchain technology.
You might wonder what’s the correlation between blockchain and Beeple’s jpeg that sold for 69 million USD or even the video clip of LeBron James dunking. The token is unique and hence we know blockchain is a way of verifying currency exchange. Everyone know how many tokens are there in each crypto wallet. Because everything is transparent on blockchain. But besides fiat and cryptocurrency, what will happen if we apply it to other things. Let’s say Beeple released a digital proof. To prove the owning right of the artwork “The First 5000 Days”. He embed the digital certificate inside a token. Meaning that whoever owns this Token is the real owner of “The First 5000 Days”. This Token is a unique, Non-Fungible Token, NFT.
