The name NFT is an acronym for the English “Non-Fungible Token”, or in French a “non-fungible token”, that is to say which cannot be exchanged for an equivalent (for example, a ticket of 5 euros exchanged for another 5 euro note). An NFT is a “digital object” whose property is traceable. Concretely, it is a contract, the rules of which are defined by computer code, based on a virtual or real object.
These rules can limit the number of copies available for sale, authorize a “re-edition”, or organize a system of royalties making it possible to remunerate the original author of a work during each transaction. It is a new type of digital asset, like cryptocurrencies like Bitcoin, which uses blockchain technology, namely an authentication directory shared between a multitude of individuals without central authority.
Especially collectors, or speculators hoping to be able to resell them later with a capital gain. NFTs have therefore been the subject of several high-profile auctions, such as the sale of the first tweet from the CEO of Twitter for $2.9 million.
They are also used in video games, cinema, music but are also the subject of more original initiatives, such as the purchase of virtual land or the breeding of virtual race horses.
As with cryptocurrencies, it is possible to buy and sell NFTs on specialized platforms. During a transaction, the object designated by the NFT is not necessarily delivered. Only a certificate of authenticity stored in the blockchain changes ownership.
To retain rights to this certificate, a digital wallet is essential, whether it is software in the form of an internet browser extension or a secure connected object in the form of a USB key. Before the purchase, it must be supplied with a cryptocurrency but it is also possible to “create” an NFT yourself, with some computer knowledge.
Buying, selling and using an NFT today remains a technical and sometimes misunderstood operation, which can put investors at risk. For each interaction with the blockchain, a fee is required to remunerate the people who are in charge of verifying the transactions.
As a recent report by specialist platform Chainalysis explains, “purchasing newly created NFTs from a highly anticipated collection is a fiercely competitive process, with thousands of users hoping to purchase at the same time.” In this case, many transactions do not succeed, but the fees remain due and are sometimes high, depending on the price of the cryptocurrencies often used to pay them.
Some buyers are determined to succeed and may use robots (powerful software for placing orders, editor’s note), which makes the operation even more uncertain for a novice investor. “The data suggests that NFTs are far from a foolproof investment,” Chainalysis further points out, explaining that NFT collections are often sold at a better price to enthusiasts who helped promote the project.
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What are the NFTs, which invest the world of culture?
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