Everyone is talking about NFTs – but what actually are they and why are people paying millions for them?

From Facebook’s ‘metaverse’ to cryptocurrency and blockchain technology, it’s easy to take one look at the world and say, ‘WTF is going on?’. One thing is for sure – we’re racing towards the new frontier of the internet at alarming speed. 

As we do so, new concepts and technologies are emerging that promise to redefine our everyday lives. One such technology is Non-Fungible Tokens, or NFTs, and with everyone from Paris Hilton to Grimes getting in on the action, it’s hard not to take notice.

But what actually are NFTs and why is everyone so hyped up about them? Are they really going to change the future and, more importantly, how do we get in on the action? 

We caught up with Pontus Rendahl, Professor of Economics (MSO) at Copenhagen Business School to find out everything you need to know about NFTs, as well as Carolyn Dawkins, Clinique Senior Vice President of Clinique Global Online, Consumer Engagement & Product Marketing, to find out how the technology is about to revolutionise the beauty industry.

WTF are NFTs?

NFT stands for Non Fungible Token – the key word here is ‘fungible’, which means replaceable. In other words, an NFT cannot be replaced or replicated – it’s one-of-a-kind and totally unique.

“NFTs are a way of making data or digital products unique,” explains Professor Rendahl. “Data normally has the property that it can be copied infinitely but through the NFT technology, data or a digital product can be verified.”

Think about it in terms of an oil painting. The original will be one of a kind and will be able to get verified by art experts and historians. Sure, you can take a photo of it, but there’s still only one original that exists in one place and is owned by one person. Just as the historian or art expert can verify the authenticity of a painting, NFT technology is able to provide verification of a digital asset through blockchain technology, which is a publicly verified digital record of ownership.

So, what are those digital assets? Well, it can pretty much be anything. Jack Dorsey, CEO of Twitter, sold the first tweet he ever posted as an NFT for over $2.9 million. Paris Hilton, with the help of designer Blake Kathryn, created a digital art series that featured three unique NFTs, “Hummingbird in My Metaverse,” “Legend of Love,” and “Iconic Crypto Queen.” She sold the collection for over a million dollars in April. NFTs also exist in the gaming world, in online shopping, in ticketing for real life events, and in virtual reality.

So, why is everyone so excited about NFTs?

There’s probably an element of collective hysteria around NFTs right now, but according to the experts, the technology itself is worth paying attention to. 

“Protecting and verifying the authenticity of digital products is really important,” says Professor Rendahl. 

“Value, philosophically speaking, is very determined by scarcity. This goes for diamonds, Rolex watches, Chanel handbags, penthouse apartments, and pretty much anything. Digital products have a problem here; counterfeiting is incredibly easy and mimics the original product identically. In fact, not even an expert can tell a bootleg copy of, say, Excel, from a licensed version. This means that anything digital can be copied infinitely many times, which undermines scarcity. NFT can solve that, and that’s really valuable.”

How can I buy NFTs and create my own?

With some NFTs selling for millions of pounds (including art NFTs created by previously unknown artists) it’s hard not to want to get in on the action. There are a number of platforms that sell NFTs, including Nifty Gateway (a digital art platform) and Mintable, which sells a variety of NFTs from music to domain names. These platforms often offer users the opportunity to create their own NFTs by ‘minting’ a digital file.