In a world where we are nearly drowning in technology hype, there is a new player in town: Non-Fungible Tokens (NFTs).
So just what is an NFT? Let’s start out with the word “fungible.” It’s a 19th century term that means “capable of being used in place of another” and is derived from the Latin “fungi” which means perform. Non-fungible essentially means unique, one of a kind, something that cannot be used in place of another. Edvard Munch’s famous painting “The Scream”, for instance, is non-fungible. Now for the token part. The token, in this case, digital art stored on a blockchain, in most cases the Ethereum blockchain, although other blockchains have implemented NFT functionality. So, with NFTs a person could own let’s say the picture of a kitten, by buying it from an artist or at auction. I would be then the sole owner of that picture. Easy enough.
The first question is that can’t someone else just right-click and make a copy of that picture? The answer is yes, they can. The second question is even easier, since the saved copy is an *exact* digital replica of the original digital art, doesn’t that by definition make it…well fungible? Also, yes.
The NFT question
What’s the big deal here, and what should IT and business professionals do about NFTs? For the first question, the big deal here is money. Some NFTs are being sold for 10s of millions of dollars and some surprisingly large companies are looking into NFTs. If you add in the mystique and fanaticism of crypto coin enthusiasts about the blockchain, you get a full-blown hype phenomenon. With all the money and attention being poured into NFTs, it becomes increasingly easy to believe that NFTs are going to be big money and big business.
But the reality is that IT and business professionals should adopt a wait and see approach and advise senior management to do the same. NFTs right now are making some people millionaires and there are a number of on-line communities that are using NFTs like trading cards. But that does not mean that John Q. Public is about to run out buy NFTs, nor does it mean that businesses are missing out on a huge trend. What’s happening right now is hype and profiteering could go away just as fast as tulip futures.
NFTs – part of a solution to an undiscovered problem
NFTs have more than a few hurdles to overcome. First is perception, where the average person does not know what an NFT is and when explained, immediately concludes that NFTs are stupid. Second is the involvement of the crypto coin community, which has an unsavory reputation to boot. Lastly, is the blockchain itself. NFTs are another example of people trying to force blockchain to happen at scale for something more than, speculation, money laundering, and illegal purchasing.
Blockchain might hold the all-time record of over-hyped technology. It’s been a solution in search of a problem since inception and despite large enterprise technology companies sinking millions into it. Blockchain has risen and ebbed several times now, with nothing real to show for it than a legally questionable shadow finance system based on cryptocurrency.
IT and business professionals should keep away from NFTs until such time as they are proven to be a real market, not just a weird tech bubble. Don’t let fear of missing out or unwarranted positivity on NFTs lead you to rash decision making.