Twitter boss Jack Dorsey is selling his first-ever tweet—“just setting up my twttr”—through a digital auction. At the time of writing, the tweet’s price was up to $2.5 million. But how exactly does one sell a tweet? Mint explains:
How does one sell digital items?
At its core, any digital item is a block of code. It can be copied from one place to another, downloaded from a website and so on. But if you have to sell something, it has to be an unique product, right? This is done by attaching an unique piece of computer code, called a non-fungible token, to the digital item in question. A tweet in Twitter CEO Jack Dorsey’s case. Think of how you buy land. Since there’s no way to actually take the land with you, you’re handed a deed, which signifies that you own it. A non-fungible token (NFT) is the cyber version of that deed.
What exactly are non-fungible tokens?
In essence, it’s a block of code that represents another block of code, but is created in a way that it can never be altered. Non-fungible tokens are digital tokens built on an existing blockchain network, just like other cryptocurrency. However, they aren’t “fungible”, in the sense that while one Bitcoin can replace another on the blockchain, you can’t replace one NFT with the next. NFTs are like trading cards, where you can trade one for another but both the cards will retain their unique identities. Once created, an NFT will forever reflect your ownership of the digital item and can’t be changed.
Are there other instances of similar NFT sales?
Yes, Dorsey is one in a line of many. Billionaire Mark Cuban has sold his tweets for NFTs, while Canadian artist Grimes had sold $6 million worth of digital art via NFTs. Earlier this month, Kings Of Leon, became the first band ever to distribute digital album by using NFTs. Platforms like Ethernity, Valuables BY CENT and more are dedicated to the sale of various NFTs.
Digital items can be copied, why use NFTs?
Owning an NFT doesn’t mean you can keep the digital item from being copied. For instance, Jack Dorsey’s tweet will remain on Twitter, and there’s nothing stopping anyone from sharing screenshots of it. Similarly, you can download a 50 second video by Grimes that sold for $390,000 and store it. What you can’t do is replicate the ownership of that video, which is what the NFT achieves. It’s the digital equivalent of being able to step on someone’s land, but you can’t own it unless you pay to acquire the deed to it.
What are some other use cases of NFTs?
At the moment, NFTs are mostly being used for selling digital art. That said, the technology can be really useful for gaming, where digital items are directly related to real money. The sword you bought for your character can forever be attributed to you, making it virtually immune to hackers who often steal in-game items from other players. Auctioneers could use NFTs to authenticate high-profile sales. For instance, a Sotheby’s can theoretically create its own blockchain network and use NFTs for digital auctions.