Kepeng.io, DENPASAR – Non-Fungible Tokens (NFT) are digital assets that represent objects such as art, videos, in-game items and music. They are traded online, often with cryptocurrencies, and they are generally coded as smart contracts on the blockchain. Media and public attention to NFT exploded in 2021, when the NFT art market had experienced record sales while celebrating a rising artist star. However, little is known about the overall structure and evolution of the NFT market.
An NFT is a unit of data stored on the blockchain that certifies a digital asset to be unique and therefore non-exchangeable, while offering a non-duplicated certificate of digital ownership for the NFT. More broadly, NFTs make it possible to establish the “origin” of assigned digital objects which offer undeniable answers to questions such as who owned, the previous owner and created the NFT, as well as which of the multiple copies is the original.
Several digital objects can be associated with NFT including photos, videos, audio, and other types of digital files. NFT is now used to modify digital objects in different contexts, such as art collections, games, and sports. Most NFTs are part of the Ethereum blockchain but other blockchains can implement their own versions of NFT.
The first example of NFT being used to represent digital art was Crypto Kitties, a blockchain game on Ethereum that allows players to buy, collect, breed and sell virtual cats. In December 2017, the game made the Ethereum network congested. By many regarded as the prime example of the irrationality that drove the cryptocurrency market in 2017, Crypto Kitties remained the only popular example of NFT for almost two years. In December 2020, the NFT art market began to grow again and attracted great attention in March 2021, when the artist known as Beeple sold his NFT work for $69.3 million at Christie’s.
During the socialization about the introduction of NFT to UKM ITB STIKOM Bali, by a representative of the Kepeng Indonesia Community Manager team, namely I Gusti Agung Gede Bayu “Banyuning”, that artists were just starting to see NFT, often focusing on certain aspects. For example, the study of copyright regulations is explored in the reference, technical details, such as NFT components, protocols, standards, and desired properties in the reference, while the possibility of a new blockchain-based protocol for tracking physical goods in the reference. An overview of the implications that NFT has on art is provided in reference, where blockchain-based NFT is presented as an evolution of the 1917 Artist contract, which was introduced in 1971 to share secondary sales royalties with artists.
Later, Banyuning explained that the items exchanged in the NFT market are organized into NFT collections, which in most cases have some common features. Collections can be very different in nature, from collectible card sets, artwork selections, to virtual spaces in online games. “Roughly speaking, according to the definition made by the Non-Fungible Corporation, most collections can be categorized into six categories: Art, Collections, Games, Metaverse, Other, and Utilities,” he said.
Banyuning continued, the first question is how big the contribution of the different NFT categories to the overall size of the NFT market. “Until the end of 2018, the market was completely dominated by the Crypto Kitties collection. Since January 2019, other categories have become popular, both in terms of the total volume exchanged and the number of transactions,” he added.
Seeing the huge opportunity for the NFT market, it has become something that the public, especially art performers, are interested in. NFT is linked to digital assets of various types, including video, text, animated gifs, and audio. Currently, it consists mostly of images. The NFT market is less than four years old and has been growing rapidly for more than six months to date. “With this NFT, it is hoped that it can help maintain the legality of a work of art and also benefit the artists,” closed Banyuning.