Gucci shoes, chicken nuggets, chips and beer. They could be ingredients for an evening in a bar of how we still know it before corona. They are also all products of which a Non Fungible Token (NFT) is made. In this article I discuss the latest developments in the field of NFTs and how you can do one yourself.
It’s not just a few innovative creatives who have launched an NFT. Celebrities such as Snoop Dog, Paris Hilton and Edward Snowden, and companies such as McDonald’s, Pringles and Lego are also stepping in. There are more than 3 million items for sale at the time of writing and sales worldwide in the last two months are up 2882%. The marketplaces where you can create an NFT are popping up like virtual mushrooms with more than $750 million in investments in the past quarter. Wonderful developments, but I do see 4 of them all.
1. Tragedy of the meet
The idea makers of NFTs who first came up with NFTs in 2014 did so with an ideology that technology should give artists control over their own work. This would make it easy to sell and they can protect work from misuse by others. In my view, this is also not the basic principle why many creatives put their work on the blockchain, with an NFT.
That’s why I think it’s really cool to see how DJs like Don Diablo are now making money through NFTs by selling a unique song. Or how Nigerians can suddenly serve a simple market. But things like beer from the sound of a fart don’t give the concept a good name in my opinion. Not to mention the red pixel, which is currently on offer for $900,000.
The warnings are therefore flying around the ears of various experts on all sides. And not with the general warnings for sharp price falls and financial losses of investment. NFTs are recorded on the blockchain. Even though this technology has already been nicely developed in many areas in recent years, NFTs are still new.
Garrett Hardin described this as beautifully as ‘tragedy of the commons’. If there is a common resource that everyone has an individual incentive to exploit, it will eventually dry up for lack of regulation of common standards. I now see this happening in NFT land and that makes an impossible search.
2. 404! Artwork not found
The number of cases of people suddenly losing their NFT and getting a 404 for the place is very strong. As the owner of an NFT, you are really dependent on the platform where you bought the NFT. Just like for cryptocurrencies, there are no clear laws and regulations that describe what your rights are. You can therefore not knock on the door of any authorities if a platform appears to be off if you make a mistake yourself when digitally storing your NFT.
As a digital thief you no longer have to go to a museum with a crowbar in your bag. You can rob a digital museum from home. The number of reports of digital robberies and scams therefore strongly influenced.
3. Not your keys, not your art
As with cryptocurrencies, an NFT is managed by a so-called ‘private key’. This is a cryptographic key of numbers and letters. You can store it, just like with cryptocurrencies, or have it stored in the place where you bought it. In the latter case, the platform holds the private key. In a recent hack of an NFT exchange Nifty, all keys were stolen and moved to the hackers’ wallets. Lost their NFT as well. The hackers only have the private key to the wallets of the hackers. These are, because of the cryptographic background, uncrackable.
The credo ‘not your keys, not your wallet’, or in this context ‘not your art’, is very relevant here. Setting up your own wallet for your NFTs is highly recommended. Online with a browser plugin such as Metamask or offline with, for example, a Ledger. You can check whether your NFT is stored securely on the Checkmynft website.
4. Copyright Confusion
The work of several well-known artists, such as Shakespeare, Beethoven and Charles Dickens, has become cultural heritage after their deaths. This is free for everyone to use. Quarrels between Italy and Italy over the use of the opera La Bohème Germany resulted in a general European directive. This makes the work of the author, 70 years after his death, a public good. Something the owners of Disney and Superman have long held back in the United States.
The new, NFT way of making, selling and distributing art automatically raises the copyright question. The digital artwork of Beeple, which was sold for $69 million, has now been made into a website, with which you can generate a new Beeple with a simple click on the button. Can that just happen?
I toured several lawyers in the Netherlands, specialized in intellectual property and technology law. They mainly point to the fact that when you buy a work of art you have the right to use it for personal consumption or to resell it. You are purchasing ownership of the item, not copyright. An NFT is nothing more than a digital proof, a receipt, with which you can prove the authenticity and prove that you are the owner. That receipt is on the blockchain and can therefore not be adjusted and is transparent for everyone.
In principle, the artist can make and sell an infinite number of copies of the digital artwork, with a unique NFT associated with it. As a buyer, it is therefore highly recommended to do good due diligence with the artist before buying a work of art. Is it a unique work or a copy?
How do you make an NFT yourself?
Many creatives I speak to and poll about this are enthusiastic. It provides a worldwide sales market with a few mouse clicks. And because of the removal of all kinds of intermediaries, it also ensures a greater yield for the creative person himself. It is also easy to make and put up for sale an NFT yourself. I list the steps below, and also watch the video for more explanation.
Step 1: Why do you want to make an NFT?
Before you start, I recommend that you first ask yourself why you want to make an NFT. In my previous article on NFTs, I wrote about the obscene energy consumption required to make an NFT. That touches a lot of sensitive strings worldwide. Are you doing it for fun? Or really because you have a serious creation that you would like to sell?
Step 2: elaborate the legal framework
Also work out the legal framework well. What about property when selling? In the field of copyright, intellectual property and possible royalties. Look carefully at the conditions of the platform where you upload. What do you all agree to?
Step 3: choose a sales platform
The largest NFT selling platform is OpenSea. This is also the easiest to use, so I’ll use that in the next steps. You need a digital wallet for this, of which Metamask is the most used and can easily be added as a plugin in, for example, Chrome or on the iPhone.
Step 4: Link your wallet
At the top right of the OpenSea site, click Create > Submit NFTs. Then you link your MetaMask account to OpenSea in the next step.
Step 5: Upload your artwork
If MetaMask is linked, you will see the My Collections screen. There is also a big blue button with Create, with which you can upload your digital artwork just as easily as you do with a video on YouTube. Just upload the file, enter the correct title, description and keywords and the NFT is ready!
Step 6: Verify the work
You just need to verify the NFT. You can do this by clicking the Create button again and clicking authorize in the automatically opened MetaMask window. After that, the NFT will be live on the platform.
Using a platform like OpenSea is free, so you can repeat this process as many times as you want.
Tulip bulbs and bubbles
Tens of billions of basketball cards were printed in the United States in the 1980s, after respected media outlets like the Wall Street Journal and the New York Times labeled them inflation hedges and millions of Americans bought them as investments. Like the internet bubble that emerged decades later and the previous cryptocurrency bubble in 2017, they all eventually burst due to oversupply.
The current madness will continue for a while. Respected analysts expect the market to be worth many billions by the end of this year. Work is now underway on environmentally friendly NFTs and NFT museums have been opened in China, Russia and the United States. The sector is developing so fast that there are new developments every week. I watch them with enthusiasm.
Jan Scheele is active in the web3 (blockchain, crypto, NFTs, DeFi) industry since 2013. Besides (former) CEO of a web3 scaleup and founder of an advisory boutique (working for governments, family offices and several multinationals), he is Digital Leader at the World Economic Forum and Board Member at the Blockchain Netherlands Foundation (BCNL). He is writing, consulting, speaking and training regularly about everything web3, all over the world. Furthermore, he is currently finalizing his book about the rise and global impact of blockchain technology.
