NFT exhibition in New York
Photo: JASON SZENES / EPA
The hype about NFTs (Non-Fungible Tokens) continues.
On Thursday, Kevin Roose from the New York Times auctioned a column he had written as a blockchain token - for 350 ethers, the equivalent of around 530,000 dollars or just under 480,000 euros.
The money - minus the unavoidable commissions of the service providers involved - should go to a charitable foundation.
NFTs, also known as nifties, are a comparatively new way of declaring digital goods unique and thus making them valuable (for some).
(You can find more about this in the infobox and in this article.) The technology became known in 2017, but it has only been making headlines for a few months.
On the one hand, this is due to experiments like those by Roose and others, who simply turn everything that is digital into NFTs.
On the other hand, the success of artists like Beeple alias Mike Winkelmann and musicians like Grimes prove that NFTs can be a new type of source of income for creative people.
Winkelmann had recently auctioned a work composed of 5,000 individual works for the equivalent of 69 million dollars at Christie's, Grimes had sold musically-based images within minutes for 5.8 million dollars.
Roose wrote on Twitter that he has been sitting in front of his screen since the auction of his column and laughing uncontrollably to himself.
His self-experiment has exceeded his wildest expectations.
AreaNFTs, Non-Fungible Tokens expand
Non-Fungible Token (NFT) means something like "non-exchangeable token".
These are one-time certificates of ownership for digital goods.
They are stored in a forgery-proof wallet on a blockchain.
The certificates refer to the respective original file.
Unlike the certificates, however, these are not copy-protected.
The certified files can be reproduced in the same way as any digital file, but only the NFT owners "own" the respective original.
Unfold the ether area
Ether, or ETH for short, is the name of a cryptocurrency like Bitcoin.
The underlying system with its own blockchain is called Ethereum.
It has existed since 2015.
Expand blockchain area
A continuously expandable list of cryptographically linked data blocks.
In other words: a decentralized, i.e. distributed over many computers and thus forgery-proof digital cash book.
Expand Smart Contract area
While the Bitcoin blockchain only allows Bitcoin transactions, Ethereum offers the possibility of concluding smart contracts and thus linking transactions to certain conditions.
These are programs that run themselves automatically as soon as the conditions specified in them are met.
You can find out more about this here.
The English word for wallet describes a device or program that is used to manage cryptocurrencies such as Bitcoin or Ether.
The virtual money itself is not stored in it, however, it is located in the respective blockchain under the public addresses of the owners.
Wallets only contain the cryptographic keys to access them.
Gas opening area
The English word for fuel expresses the computing power that is required for every operation - for example a transaction or the execution of a smart contract - in Ethereum.
Those who provide this computing power are paid with gas.
You can find out more about this here.
Like euro pieces, NFTs have to be “minted”.
In this case, that means: The smart contract, in which the creators, properties and sales conditions of an NFT are programmed, is written into the blockchain and thus documented in an unchangeable and publicly viewable manner.
At the same time, the fundamental problems of NFTs become clearer.
One is the climate problems that the technology of the Ethereum blockchain brings with it, which in turn forms the currently best-known infrastructure for NFTs.
So that the transactions are logged in the blockchain, very computationally intensive processes are necessary.
Due to the correspondingly high power consumption, NFTs are considered environmental sins by critics.
Ethereum is supposed to be switched to a less energy-hungry technology, but when it will happen is not foreseeable.
The other problem is the possibly limited "lifespan" of the NFTs' digital title deeds, so-called tokens.
As the IT security expert Robert Graham has worked out, among others, the data crucial for an NFT are by no means all on a blockchain, where they cannot be deleted.
Rather, only a hash value generated with cryptographic operations, a digital fingerprint, is anchored in the (Ethereum) blockchain.
This hash refers to a file with metadata about the actual work of art, i.e. the digital image, piece of music or the "New York Times" column: what the work is called, what its own digital fingerprint is and where it can be found on the Internet .
So that the latter is not just a single address, i.e. ultimately a single computer, a decentralized file sharing system called IPFS (InterPlanetary File System) is used for NFTs.
IPFS allows access to a file as long as it is held by at least one of many distributed computers.
This is actually a security mechanism, a distributed backup.
But there is no guarantee that it will work that way.
This has already led to several cases in which NFT works of art were no longer accessible, as "The Verge" reports.
In other words: The hype is currently based on fragile foundations.