The NFT and crypto craze: What are NFTs?

Contributed by Patrick Lichty. “The Ghost of Umm al Quwain”, an NFT by Patrick Lichty. This is a digital recreation of the mysterious abandoned 1970s Russian cargo plane currently located at the Umm Al Quwain Airport in the United Arab Emirates.

Gabriel Hathaway, Editor-In-Chief
February 16, 2022

The term “NFT” has been working its way into traditional media, social media and word-of-mouth conversations over the last year.

There have been countless headlines calling attention to the exorbitant amount of money an NFT or collection of them has sold for. Just two weeks ago, the Canadian musician, Grimes, sold a collection of NFTs for $6 million and last month on his late night talk show, Jimmy Fallon presented an NFT he bought to his audience before his guest, Paris Hilton, announced that everyone in the crowd was getting an NFT of their own as well. All of this and still the term NFT is an enigma to so many people. What really are NFTs?

An NFT, otherwise known as a “non-fungible token,” is a receipt or proof of purchase for a piece of digital media, such as an image, gif, song, soundbite and more. The blockchain, which works as a digital ledger, authenticates NFTs by keeping a running record of them.

The first NFT was sold in 2014 by Kevin McCoy, but recently, NFTs have made it into the mainstream.

So, what’s the big deal here? Patrick Lichty, a professor in the mass communication department at Winona State, has been a new media artist for 30 years and has created and sold NFTs. Lichty commented that NFTs solve a couple of big problems with digital media, that being the concepts of scarcity and uniqueness.

“The idea that this contract that ensures this piece of work is owned by this person creates an exclusivity…it’s sort of like baseball cards,” Lichty said.

Similar to baseball cards and sports memorabilia, there are a few reasons people buy NFTs: to have as a symbol of status, to guarantee value or for profit through trading or marketing and selling.

NFTs are a highly speculative market, Lichty comparing it to the stock market. The value of NFTs are very socially influenced, so marketing is a big part of being successful in the NFT space. NFTs and cryptocurrencies often go hand-in-hand.

“This is basically a social media marketing ecosystem where you have people creating digital content, not just artists, who are engaging in marketing campaigns, who are then making value propositions and then taking those value propositions to blockchain based platforms and trying to sell stuff for crypto,” Lichty said.

NFTs in concept also help digital creators market and sell their work. Often digital artists have their work screenshotted and stolen for free and without artistic credit. The NFT and blockchain work to fight against that by creating a way to guarantee ownership of digital content.

The process to create an NFT is not free though. NFTs have to be “minted,” which means to authenticate the piece of digital media through a contract stored on the blockchain. To mint something, there is a “gas” fee that has to be paid. The price of gas varies depending on the NFT platform, but on Ethereum, a popular NFT platform, gas costs $75-150, according to Lichty.

Lichty predicts much will change within the NFT market during the next five years.

“What we are seeing right now is something equivalent to the Internet in 1995,” Lichty explained. “NFT platforms and cryptocurrencies are merely a form of financial software platform and they are in their infancy.”

Currently, this sort of new age NFT and crypto market is huge, Lichty said, explaining there is currently an “NFT fever” happening. There is big money to be made in NFTs and lots of people are looking to cash in. At the same time, people may be looking to capitalize off the hype and scam others. Lichty warned to be smart and careful when investing in NFTs.

“In any place where there’s a lot of money, there’s a lot of people trying to call scams and that’s to be expected,” Lichty said.

There are many more interesting topics related to the NFT and crypto craze, things like the Bored Ape Yacht Club, how NFTs negatively impact the climate, the metaverse, crypto mining and more. If you’re interested in any of these topics, the time is now to read up.