Confused by NFTs? They are more straightforward than you realise

Before we get to that, consider this. Virtually unheard of 12 months ago, NFTs have become akin to the new gold rush in the art world – and increasingly in the commercial world too.

According to the analytics company DappRadar, sales volumes for NFTs soared to $2.5 billion in the first half of 2021, as artists, celebrities, major companies and corporations joined the hunt for digital assets (even government institutions have joined the crypto craze) and created a fervid market for digital tokens. That compares to the total of $95 million generated by NFT collections in 2020.

But are NFTs, as some maintain, the brave new frontier of art, or are they the emperor’s new clothes?

To put it simply, an NFT is a certificate of ownership and authentication for any asset traded on a blockchain (a decentralised digital ledger), in cryptocurrency. Virtually anything – or to put it more precisely, anything virtual – can be traded as an NFT: images, music, sports clips, tickets, even land. In March, Jack Dorsey, the founder of Twitter, sold his first ever tweet from 2006 – ‘just setting up my twttr’ – as an NFT, for $2.9 million. (The buyer, Sina Estavi, chief executive of the cryptocurrency firm Bridge Oracle, described it as being as important as the Mona Lisa.)

In May, news outlets excitingly announced that the model Cara Delevingne was ‘selling an NFT of her vagina’. Less excitingly, it turned out to be a collaboration with the artist Chemical X: a short clip of the model, revealing only her bare shoulders and filmed on what looks like a tropical beach, breathily reciting into the camera, ‘My first word was mine. To me that means something that is most mine: my vagina. I own it. It’s mine and no one else’s. I choose what I do with it. And no one can take that away from me.’ Chemical X described this as ‘a powerful yet personal statement of intention’. The piece made $21,000 at auction. (All proceeds were said to be going to The Cara Delevingne Foundation, which supports women’s rights, the LGBTQ community, and mental health and environmental causes.)

But the main traffic in NFTs is for digital artworks, mostly traded through specialist digital auction sites such as Nifty Gateway, OpenSea and MakersPlace, on the blockchain Etherium, which maintains a secure record of cryptocurrency and NFT transactions through a process called mining.

While digital art has been around for many years, showcased in museums and institutions, the interest and the market for it has grown exponentially in the past 18 months, fuelled by the development of blockchain technology, which makes the work readily available through the internet, and the growth in cryptocurrency – and accelerated in no small measure by the enforced confinement of Covid, which has seen collectors and investors poring over new ‘drops’, as the pieces are called.