NFT – The New Digital Stock Exchange
What's an NFT and how do people profit from it? Dr. Amir Elalouf, of Bar-Ilan University's Department of Management, discusses the multi-billion dollar digital market and the technology behind it.
NFT is a buzzword that has become popular of late, but it’s doubtful that its meaning is clear to everyone. NFT is an acronym for non-fungible token and is referred to as the new digital goldmine. But what is an NFT? Dr. Amir Elalouf of Bar-Ilan University’s Department of Management explains.
An NFT is a unique and original work of digital art that can be purchased in a digital store with digital currency, similar to physical artwork that can be bought with money. In essence, NFTs are assets.
Once an NFT is purchased, it is marked as authentic and belongs exclusively to its owner. If this explanation hasn’t been confusing enough, now is the time to note that an NFT can be virtually anything. In addition to artwork, you can purchase source code from the internet from the 1980s; real estate in Kyiv (guess what costs more); club membership fees; tickets to parties; or a plot in Meta’s (Facebook) virtual reality world, Metaverse, preferably near the virtual home of a celebrity. These are all real examples.
However, the most popular type of NFT is artwork, some of which sells for tens of millions of dollars. Bar-Ilan University, for example, distributes digital artwork as a present to students who registered for the 2022-2023 academic year. But like everything on the internet, once uploaded, the original artwork is accessible to all and can be copied. Nevertheless, Dr. Elalouf explains that people still desire to see the original artwork, similar to those who visit the Louvre to see the Mona Lisa, even if they’ve seen thousands of pictures of it throughout their lifetime. The desire to see original artwork, it seems, exists even in cyberspace.
Thus, people invest in NFTs in the hope that their value will increase. The artwork owner enjoys various rights, such as using it as a profile picture or selling it to someone else. The owner can also earn royalties from the NFT. Just as precious artwork is stored in a safe or a secure display room, NFTs are stored in the blockchain, the virtual bank where bitcoin is stored.