OPINION: So you want to get involved with NFTs? Here’s what you need to know
Thought the past year couldn’t get any crazier? Well, I hate to break it to you, but people are now buying tweets online for prices over $1 million.
Yep. You read that right. As of March 16, 2021, a tweet by SpaceX owner and Tesla CEO has been bid on to sell for over $1.1 million (CNBC). The tweet is nothing more than a basic example of a non-fungible token, colloquially known as an ‘NFT’ in today’s digital media universe.
This post will explain everything you need to know about the NFT craze that’s been dominating headlines in the sporting world and evaluate whether investing in such a craze is worth your time and energy moving forward.
What is an NFT?
Put simply, NFTs are individual pieces of digital content. They are ‘non-fungible,’ meaning they are meant to exist as unique pieces of content that cannot be copied or replaced. NFTs exist in a wide range of forms. They can be jpegs or video clips – any sort of digital asset that can be claimed in its original iteration (The Verge).
Although NFTs are the talk of the town these days, the very contents of them are not much of a novelty. Elon Musk’s NFT $1.1 million NFT is a mere two-minute tweet of a techno-music video. Check it out for yourself:
If you’re confused as to why a silly tweet like this from Musk got sold for six figures, you’re not alone. It makes little sense as to why someone would pay that much to own a piece of content that literally anyone in the United States with an internet connection can access at any given time. That said, we should not merely pass over this trend and dismiss it as a fad that is ultimately destined to fade out. It very well might in the end, but the reality is that individuals and organizations across the world are finding huge sources of revenue off of NFTs.
Super Bowl champion Rob Gronkowski has been one of the first athletes to jump into and embrace the NFT mania. He has released his very own original set of around 350 digital Gronk trading cards, which have gone on to sell for more than $1.2 million (Yahoo!).
Cards are not the only way athletes can get involved and cash in with NFTs. NBA players like Lebron James have started putting individual highlights on the digital market for as much as $250,000 (ESPN).
The Pros of Non-Fungible Tokens
Perhaps the biggest novelty and interest surrounding NFTs is the blockchain technology that is used to power their transactions. Blockchains, which are the same computer networks that power cryptocurrencies like Bitcoin, can track any and all transfers from an item through a complex chain of digital technology (NBC News). This blog is most certainly not about cryptocurrency, and I’m not going to pretend like I even understand blockchain technology in its entirety, but it is undoubtedly an essential part of understanding how and why NFTs have gained popularity.
The immense value placed on these pieces of seemingly ordinary digital content derives from the idea of pure ownership. With blockchain technology, it is remarkably easy to trace digital exchanges safely and securely. This has paved the way for NFTs to exist given the fact that there is a digital blockchain database to track every sale or purchase of a given NFT. Whether it’s an Elon Musk tweet from 2021 or a Shaquille O’Neal dunk from 2001, NFTs carry a unique stamp of authenticity with them. Copying and counterfeiting them is virtually impossible (Sports Illustrated).
The authentic ownership aspect of purchasing an NFT gives these digital collector items the power to become a substantial player in the sports business industry for a long time. The chance to own and hold exclusive rights over a highlight or piece of digital memorabilia is something that all sports fans can get behind.
Another exciting thing to keep an eye on with regards to the development of NFTs is how it fits into the conversation of NIL (name, image, likeness) with regard to NCAA student-athletes. One of the biggest reasons NFTs have become so popular in the music and art industry is because they can give a creator total control over their own art (NBC). As the conversation evolves around collegiate athlete amateurism and NIL rights, NFTs could be a way for student-athletes to start profiting off of their college careers.
With the craze still in its early stages, the jury is still out as to whether the hype around NFTs will sustain itself long-term. The moneymaking potential of these digital assets is obviously appealing, but there are still a number of drawbacks that warrant consideration.
In some ways, the craze does seem a little too good to be true. The authentic ownership aspect of purchasing an NFT may be enticing now, but that hype could wear off once people gain a grip on the fact that anyone can just go to Google or a social media platform to access that content. Furthermore, there are concerns regarding the durability of the blockchain technology itself that powers the entire NFT operation in the first place. The safety and security of the technology remain an issue, and there are even calls to reduce the use of the blockchain computer network given its large carbon footprint (Bloomberg).
As things stand right now, it’s hard to see NFTs as anything more than an easy moneymaking opportunity for content creators. In a time where revenue streams have been brutally hard to come by for artists due to the cancellation of live events and showcase opportunities, the rise of NFTs offers a quick way to get some money back in their pockets.