Mark Twain’s supposed death in 1897 isn’t the only one that was greatly exaggerated. NFTs, an acronym for nonfungible tokens, are today experiencing premature pronouncements of their demise. One source declares the NFT bubble is bursting, another points out that NFT prices are dropping, and yet a third claims that the mocking of NFTs by billionaire Elon Musk was one of the reasons for a collapse. Of course, these reports come in the midst of a broader decline in the stock market and the cryptocurrency markets as well.
Much of this reporting on the downward trend in NFTs (pronounced “niftys” or “nefts” or simply “eN-eF-Tees”) has focused on the number and price of some NFT sales, entirely missing the broader technology trend signified by NFTs. NFTs represent an important new way to think about virtual property and digital ownership, and the innovation it represents won’t disappear just because of current fluctuations in market prices.
Those who underestimate the power of this new technology will end up like those who believed the World Wide Web was dead after the crash of 2000. In reality, the power of the web had really just begun to be realized. Think of all the things that were still years away: Facebook and Twitter and YouTube, Zoom and Fortnite, Netflix’s video streaming service, Musk’s Tesla selling used cars on their website sight unseen!
Why are NFTs another key component of this digital revolution? A nonfungible token represents verified ownership of a distinct piece of digital property, like a digital picture or a piece of virtual real estate in a video game. Like the purchase of any property, to be accepted as valid, ownership needs to be registered somewhere. If you buy a house, that happens in the local registry of deeds. For a car, it’s at your state’s department of motor vehicles.