blockchain

NFT 101: Your Guide to Understanding the Wacky World of Blockchain and Crypto Art

In February a collector paid $208,000 for a video of a LeBron James slam dunk.

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This story originally appeared on LX.com

For just a second you were feeling pretty proud of yourself, weren't you? You had just gotten to the point where you were able to have a semi-intelligent conversation about Bitcoin without making a fool of yourself... and then comes the next thing. Now you're hearing terms like blockchain and NFTs and hearing that collectors are dropping hundreds of thousands of dollars on something called crypto art. What the heck is crypto art?

Don't worry... we're here to help.

Before we even get to crypto art you'll need to understand the basics of blockchain and that funny sounding acronym "NFT."

So first some basics:

What's an NFT?

NFT stands for non-fungible token — in other words, a token that is unique and not interchangeable. This kind of token is like Bitcoin. The difference is while you can trade Bitcoin and have more of the same thing that represents real money at a varying market value, each NFT is unique. You can possess the token that says you own something, like an art piece, and you can trade it, but if you do, you'll be giving up any ownership of it.

What's Blockchain?

Blockchain can be described as a decentralized data structure that holds transactional records while ensuring security, transparency and decentralization. Picture it like this: Imagine a ledger existing online that keeps a publicly accessible record of who owns what, similar to the kinds of networks that ground cryptocurrencies like Bitcoin or Dogecoin. NFTs are connected to blockchain systems like the Ethereum blockchain. a community-run technology powering the cryptocurrency, ether (ETH) and thousands of decentralized applications.

So if you buy an NFT (say a digital piece of art or an NBA dunk highlight), the unique bit of information about that artwork—including its smart contract and origin—is stored on the blockchain. It proves you own it. You can also think of it as a chain or records stored in the forms of blocks that are connected and managed by no single authority.

What is Crypto Art?

Crypto art works by adding a unique signature or code to a digital file, called tokenizing” or “minting” it on the blockchain — a technology that acts like a permanent ledger or registry distributed across many computers instead of a central one.

Crypto currencies and its tentacles like the blockchain are on fire these days. NBCLX spoke with several experts to learn more about how this growing trend uses cryptocurrency, blockchain technologies and the artist community to create a whole new platform of content where the creators are the owners of content, not the platforms themselves.

One Miami-based artist who goes by the pseudonym REMOTE recently launched his first series of crypto art products to OpenSea – one of the largest marketplaces for user-owned digital goods.

“It’s a new avenue of expression. So, I can continue doing what I do – there’s just a new platform for me to share it,” he said.

But why would an artist digitize their art and how do they get it to the blockchain safely? One Blockchain coder and internet expert who goes by the pseudonym TECHMENTAL explained the process.

“Let’s say Twitter, Instagram, Facebook – they keep all their data within one server. So, if there’s malicious intent all they have to do is direct their malice to one server." he said. "Where with blockchain technology that’s not necessarily the case, because that specific data is parsed around the world tens of thousands, hundreds of thousands, and now maybe millions of the same data being shared – and those computers, those servers are referenced as “nodes.” And basically, that’s what gives the value of blockchain. The data is kind of safe – for this particular case.”

Experts like TECHMENTAL partner with other artists like REMOTE to create unique, one-of-a-kind pieces of art and “tokenize” or code them in such a way so that the file lives on the blockchain forever.

But why pay so much for a digital file when you can screenshot an image and have it for free? "Well nothing is stopping you from doing that," says REMOTE. "But you have a degraded image of something that was shared on Instagram. You don’t own anything.”

For artists like REMOTE, crypto art is not just a new platform to showcase and sell his work. The NFT allows him to make a predetermined percentage on his work every time it is sold on the marketplace.

When it comes to creators in this new digital landscape, there is one who dominates the rest: Mike Winkelmann, better known in the industry as Beeple.

Beeple has 1.9 million Instagram followers. His work has been shown at two Super Bowl halftime shows but he has no traditional gallery or foothold in the traditional art world.

But in December the first extensive auction of his art grossed $3.5 million in a single weekend. An original NFT of his work was recently resold on the secondary market for $6.6 million. Other genres are also getting in on the fast-moving market. The band Kings of Leon recently announced they would be offering their latest album as an NFT.

The start of the rush for NFTs has been linked with the launch of the U.S. National Basketball Association’s Top Shot website, which allows users to buy and trade NFTs in the form of video highlights of games. The biggest transaction to date was on Feb. 22, when a user paid $208,000 for a video of a LeBron James slam dunk.

“Crypto art is not a style or genre. It is a medium," says TECHMENTAL. "It is a medium that encompasses endless styles and genres. It’s not an age thing you know, it’s kind of a moment thing. It’s where now this art you’ve been sitting on – whether you’re a musician, whether you’re a digital artist, whether you’re a photographer, whether you’re a writer, all that content you’ve been holding now has value.”

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