Blockchain and NTF: the unique and collectible value of digital files.

March 11, 2021 was a historic day for the electronic asset market and the virtual art ecosystem. A digital work by artist Mike Winkelmann, better known on social networks by his pseudonym Beeple, was sold for US$69 million, making it the third highest paid work by a living artist. 

Beeple's art has been sold for large sums of money, reaching historic figures. However, the values achieved with his works are not only based on creativity and artistic composition, but also because they are NTF or non fungible tokens. 

NTFs are a type of cryptographic asset based on blockchain technology, with unique identification codes and metadata, which are inserted into each digital file, giving them thousands of specifications and giving them a unique character. By distinguishing themselves from each other, each file, which can be a digital work, a meme, a gif or even a Twitter post , acquires the attribute of collectability. 

On the technical side, NTFs work and are transferred by leveraging blockchain technology , which is used insmart contracts and by cryptocurrencies such as Ethereum .

In the case of Ethereum, the blockchain allows for a single, consensual and distributed record of each of the transactions and exchanges on the network, functioning as a ledger. Because of this, by incorporating this technology, buying and selling non-fungible tokens can only be done through the virtual currency. 

However, NTFs differ from cryptocurrencies. The former are not interchangeable, as no two files are identical. In addition, they are not divisible, because they cannot be split into smaller denominations. Also, they are indestructible, as all data is stored in blockchain which makes it impossible to delete or replicate. And, their ownership is immutable, meaning that it is the collectors who own them and not the technology company that creates the software .

Every day, non-fungible tokens are rapidly gaining popularity on the Internet, especially among the new generations, who have endowed digital assets with value. However, their fame did not come from one day to the next and their origin can be traced back a few years. 

Origin and rise of NTFs

The birth of non-fungible tokens can be traced back to 2017, when Dieter Shirley, created the Cryptokitties, unique digital representations of cats. At its inception, each unit had a value ranging from US$12 to US$95,000. Fans of these cats spent more than $20,000 to buy, feed and care for them. 

Over time, this technology was incorporated into other types of files ranging from works of art to digital sports cards, making their authors acquire large sums of money. 

Recently, a meme creator sold an NFT of this work for 300 Ethereum, Jack Dorsey put his first Twitter post up for sale , the auction of which topped $US2.5 million, and basketball fans have spent more than US$230 million trading NBA cards depicting classic moments in the sport. 

Thus, non-fungible tokens have burst into different spheres of the digital world and driven an unprecedented collecting industry in the network, since, through technological development, value has been given to digital files.