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Explainer | From Cryptokitties to Beeple’s ‘Crossroads’ and clips of LeBron James dunking – NFTs are everywhere. Here’s why

  • While an NFT does not stop others from duplicating creative works, it allows its holder to claim possession of an original piece
  • A first step towards owning NFTs would be to download a cryptocurrency wallet and buy a digital currency

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Mike Winkelmann, aka Beeple, fetched US$6.6 million for his work ‘Crossroads’ in February. Photo: Handout
Georgina Lee

A non-fungible token (NFT) is a blockchain-based token that can represent anything from collectibles and art pieces to other creative works whose designs are one of a kind and, therefore, non fungible.

Some NFTs are minted for the purpose of providing data and information that can prove the authenticity of an underlying item backing the NFT. Other NFTs, which are not backed by any physical assets at all, are digital files that contain unique and original creative work.
The first NFT that created a buzz among cryptocurrency enthusiasts was Cryptokitties, a game released in 2017 by Canadian developer Dapper Labs that allows players to buy, collect and breed unique digital cats on the blockchain for fun.
Cryptokitties allows players to buy, collect and breed unique digital cats on the blockchain. Photo: Handout
Cryptokitties allows players to buy, collect and breed unique digital cats on the blockchain. Photo: Handout

Why do creators of art works and music and game developers use NFTs?

Thanks to smart contracts, which are programs stored on the ethereum blockchain, details that identify an underlying unique asset are recorded on the blockchain. And while an NFT does not stop others from duplicating creative works, it allows its holder to claim possession of an original piece, thanks to the unique identifying details stored on the blockchain ledger.

Rules can also be coded in smart contracts that define the rights of an NFT holder. One example is rules that define the original NFT creator’s share of revenue from subsequent sales, according to law firm Norton Rose Fullbright.

A clip of Los Angeles Lakers’ LeBron James dunking reportedly sold for US$200,000 in February. Photo: EPA-EFE
A clip of Los Angeles Lakers’ LeBron James dunking reportedly sold for US$200,000 in February. Photo: EPA-EFE

How do you buy NFTs?

As NFTs are minted on the blockchain, a first step towards owning one would be to download a cryptocurrency wallet that allows one to buy, store and transact using cryptocurrencies. A commonly used blockchain for NFTs is the ethereum blockchain and interested buyers would need to buy the cryptocurrency ether.

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