It's called a Non-Fungible Token (NFT) and a US newspaper columnist created it for fun, putting one of his articles up for sale on the blockchain and making it a sensation: here's how

Modern times

The article you are about to read has something sensational about it, not for the content. But for the business he created. Kevin Roose — the technology columnist of “The New York Times” — has transformed, almost for fun one of his columns (Shift) on the New York newspaper in a Non-Fungible Token (NFT). Well the snapshot of the address book (a simple .png) was sold in a digital auction of the Foundation platform for over half a million dollars.

A few weeks earlier, the artist Beeple (born Mike Winkelmann) had sold in a similar digital auction, this time held by Christie's, one of his digital works (always a .jpg associated with an NFT) for 42.329,453 Ether (the cryptocurrency of the Ethereum platform) equal to 69,3 million real dollars. To have a reference, the one made by Beeple would be the fourth highest value in the world of art auctions of 2020 after Monet (110 million), Koons (91 million) and Rauschenberg (88 million).

everydays — the name of Winkelmann's work — was bought by Singaporean cryptocurrency entrepreneur Vignesh Sundaresan, also known as MetaKovan. The 42.329,453 Ether payment covered both the $60,2 million auction price and $9,1 million in fees, according to Rebecca Riegelhaupt, a spokeswoman for Christie's.

Scott Reyburn hatches on New York Times Sundaresan's lavish projects including a huge virtual museum for NFTs.

Something shocking

Naturally Beeple fell like a napalm bomb on the art market and the world of art auctions, rather tried by the pandemic. And he is certainly not the last of the fallen bombs. A animated gif 8-bit cat with a tart body (known as the Nyan Cat or Pop Tart Cat) was auctioned for $600 to the benefit of an anonymous bidder. Its creator, Chris Torres, had made it 10 years ago and Nyan Cat had become one of the most popular memes on the Internet.

It is important to point out that in these auctions the property or copyright of the auctioned "object" is not awarded, but simply the certificate of uniqueness and authenticity of the original awarded. Uniqueness that is incontrovertibly and inviolably proven by the NFT associated with the object.

NFTs have opened up a new and seemingly incredible market for digital art, mayflies and content that satisfy a hitherto latent need of collectors and new media enthusiasts.

In 2020, the total value of the NFT market amounted to $250 million, but in 2021 there was an explosion due to the pandemic and the unusual availability of cash. However, whether these objects can maintain or increase their value over time remains to be seen.

“We are in a speculation frenzy. I don't know how long these prices will be sustainable,” Robert Norton, the CEO and co-founder of Verisart, a company that certifies artworks on the blockchain, told the New York Times. “We are living in a moment of collective hysteria”.

Elimination of all intermediaries

The whole thing seems like an eccentric invention of a science fiction writer like Bruce Sterling and maybe it is. But if it weren't, the consequences of this technology would be unimaginable.

Above all, the elimination of any intermediary between the creator of any digital product and the reference public would take place. Both could enter into a transaction, even of an economic, direct, secure, certified, non-alterable nature.

So adieu Amazon, PayPal, bank, lawyers, notaries. Even if the taxes will stay, it's too good to be true! Everything will be certified on a distributed public ledger called blockchain through a unique encrypted key (token) and the transition will be settled with the cryptocurrency of the platform where the deal takes place.

Whether it's really a deal remains to be seen. There are many inflated balloons and landruncoli on the net... But the "suns" are also taken with material goods (see various crusty caravaggi).

The aura

But what substance is there in buying something intangible like a jpg, an animated gif, an M4P video or an MP3? “You buy a feeling” says Ben Horowitz, partner of Marc Andreessen, one of the most important Venture Capital firms in the world. But he is a billionaire banker, even though he wrote a fascinating book in which he shows that he is above all a theorist.

I really don't want to inconvenience Walter Benjamin, who made some fundamental reflections on art in the age of its technical reproducibility, but perhaps we can say that one acquires the "aura" of an object (my goodness! the term "buy" would horrify Benjamin), that is, that poignant "peckishness" that comes from having before your eyes a work of art in its authenticity, in its uniqueness, an artifact that emanates a vital, almost mystical force (as in a séance) with the its creator.

And the aura generates a sort of transfer with the artist or the character depicted. In front of Gioconda we all felt it before the selfie freaks arrived at the Louvre. Think about the Dead Christ of Mantegna in Brera. In its raw realism, a work of powerful mysticism that generates a transfer that stays with you for days and days. If you see the work reproduced in a book or on a screen, nothing is triggered.

But can a digital work have an aura? Even Benjamin, in his extreme progressivism and love of experimentalism, would perhaps doubt. Yet something similar to the aura also works with the possession of any collectible, a material which, due to its uniqueness and its intrinsic nature, embodies a meaning. Perhaps the aura is independent of material and format.

However, the issue of digital art is different from my personal subjectivation. Since May 5th is approaching, here too the question is "Was it true art?". "Posterity will judge".

The problem we will have

Coming down to earth, we definitely have a problem with NFTs, cryptocurrencies and blockchains. The problem is the environmental sustainability of these technologies.

The blockchain is based on specialized computers that deploy enormous computing power to solve complex equations, making quintillion attempts per second to verify transactions. It is this practice, called “cryptomining,” that makes blockchains so energy-intensive.

Researchers at the University of Cambridge estimate that mining Bitcoin, the most popular blockchain-based currency, uses more electricity than entire countries like Argentina.

According to a controversial paper from 2018, emissions from blockchains could blow up the goal of limiting global warming to 2 degrees Celsius as foreseen by the Paris Agreement.

But here the speech would be long and controversial…

New York Times reporter Kevin Roose tells how he created an item that fetched half a million euros in a crypto auction.

Buy this item on the Blockchain

by Kevin Roose

It happens in the digital art world

Generally, I'm not allowed to auction my own items.

But this time I made an exception, because what went up for auction was the article you were reading.

I made the decision to enter the wild world of Non-Fungible Tokens, or NFTs, the new frontier in the cryptocurrency gold rush. This is my first experiment: an NFT address book that is turned into an NFT and auctioned off.

An NFT is a new type of uniquely-registered encrypted digital object (token), stored in a permanent record of a blockchain. This type of token, which is non-fungible i.e. interchangeable, can function as a certificate of uniqueness that is impossible to break or counterfeit. This makes it ideal for artists, musicians and others who want to create digital assets and secure control over them or any income that can be derived from them.

Right now The NFT market is exploding. Early adopters and crypto enthusiasts are looking to capitalize on this trend.

Recently, Mike Winkelmann, an American digital artist, who goes by the name Beeple, sold his creation entitled Everydays: The First 5000 Days, in a Christie's online auction for more than 69 million dollars. Other NFTs representing other digital works — such as the illustration of Homer Simpson as Pepe the Frog — have sold for hundreds of thousands of dollars.

NBA Top Shot is a partnership between the NBA (National Basketball Association,) and Dapper Labs, a blockchain services company, that transforms basketball highlight videos into unique crypto collectibles. That partnership has achieved $230 million in sales since 2019. Even well-known musicians like Kings of Leon are entering the NFT market, selling millions of dollars worth of music in the form of digital tokens.

…beyond art

As I watched the business generated by these goods I thought to myself: why should only celebrities, athletes and artists enjoy this gargantuan party? Why can't even a journalist join the NFT party?

So I decided to turn this address book into an NFT and put it up for auction. Anything I get will go to the New York Times Neediest Cases Fund, an initiative that supports charitable causes in New York and elsewhere, started 110 years ago by Times editor Adolph S. Ochs.

(Accountant note: Since the Neediest Cases Fund does not accept direct transfers of cryptocurrency, I will need to convert these proceeds into dollars, which means this is not a tax-deductible donation to me).

The steps to create an NFT

The first step in setting up my NFT was opening a digital “wallet” to use to manage my token, as well as any cryptocurrency made in the sale. I used a browser extension called MetaMask and set up an empty wallet for Ethereum, the cryptocurrency network of choice for NFT collectors.

Then I had to find a "place" to hold the auction. I chose the NFT marketplace called Foundation, which hosted the sale of the famous “Nyan Cat” graphic that made nearly $600.000.

Once I logged into Foundation and linked my account to the Ethereum wallet, I had to upload an image of my address book to a decentralized storage service called the InterPlanetary File System, or IPFS. Then I had to mint a mapped token to link to that file. I did this by generating a unique cryptographic signature, registered on the Ethereum blockchain, marking the uploaded file with it.

Foundation makes minting an NFT easy, but adding it to the Ethereum blockchain cost something. It required the payment of a sort of “fuel tax”, a congestion payment calculated on the occupancy rate of the Ethereum network.

Listing my token required two transactions: one to mint the token and another to generate the code to run the auction. These days, the cost to set up a single NFT can exceed $100, although the norm is anything over $50.

The next step was to put my NFT up for sale. I've set 0,5 Ether, about $850 at the current exchange rate, as the minimum bid bidding price. The auction lasted 24 hours. After beating the winner, the token will automatically be transferred to that person's Ethereum wallet.

The perks

In addition to selling the token, many NFT sellers add benefits/perks. Kings of Leon, for example, plan to send a limited edition vinyl album to people who buy their NFTs. They also offer buyers a special "golden ticket", i.e. an NFT ticket for free admission for life to all future concerts of the band.

I don't have any concert tickets to offer, but I wanted to make my offer more attractive too. Here's what the successful bidder will get.

As with all NFT sales, there will be the token itself, i.e. the authentic digital object, an image of this address book in .png format, to collect and display. (Our lawyers want it to be clear that the NFT does not include copyright of the article or any rights of reproduction or syndication).

The winning bidder will be mentioned in a follow-up article about the auction, along with his name, and a family picture of his choice. (NFT sales don't require you to identify yourself to anything other than your Ethereum address, so you can remain anonymous if you prefer. Also, my bosses want it to be clear that the Times retains editorial control over the follow column. -up and reserves the right to reject proposals that do not meet our editorial standards).

And as a final bonus, “The Daily” host Michael Barbaro will send a short, personalized congratulatory voice memo to the winning bidder.

What is the point of acquiring a PNG file of an article?

The meaning of this acquisition, of course, is to become owners of a piece of history. This is, in fact, the first article in the nearly 170-year history of the Times to be distributed as an NFT, and if this technology proves to be as transformative as its fans predict, owning it could be tantamount to owning the first television broadcast of the NBC or AOL's first email address.

Of course, this isn't a guarantee. NFTs could turn out to be a fad fueled by a bubble — the digital equivalent of plush Beanie Babies — and the investment could prove worthless to the successful bidder.

But if they stick around, NFTs could transform the way digital goods are created, consumed and traded online. Some news outlets, including Quartz and The Associated Press, have already experimented with selling NFTs and YouTubers and other online influencers have started creating their own lines of crypto-merchandise.

Something real

Part of the hype around NFTs is undoubtedly advertising. The world of cryptocurrencies is full of cheaters who get rich with even illicit projects. We must not forget that NFTs and other cryptocurrency-related projects require huge amounts of energy and computing power, which makes them a factor in environmental degradation.

There are also many legitimate questions about what NFT buyers are getting for their money and whether these tokens will transform into a value chain or whether the marketplaces and hosting services that store the underlying files will disappear into thin air as they appeared. from nothing.

But there is something real about all of this that is worth taking seriously. For decades, artists, musicians and other creatives have struggled with the fact that, on the internet, reproducing any digital artifact was easy, if not trivial. Scarcity — the trait that gives art its value in the real world — was difficult to preserve online, because anyone downloading a file could copy and paste it an infinite number of times, with no loss of quality.

The guarantee of Bockchain technology

Blockchain technology has changed all of this scenario, making it possible to associate a cryptographic authenticity marker with a digital asset and maintain a permanent certification of its authenticity. You can copy the file marked with an NFT as many times as you want, but you can't forge the underlying digital signature; circumstance that gives collectors of rare digital assets a certain peace of mind. And NFT fans think the technology could be used to track all kinds of assets in the future, home and auto titles, business contracts and wills.

Creators can also incorporate royalty licenses into their NFTs, passing on the right to a portion of the profits made to third parties each time they succeed in reselling their assets. (I have tried to remove royalties from the NFT for this article, but have not been able to change the Foundation's 10% rate on secondary sales, so I will also donate future royalties to the Neediest Cases Fund, paying taxes to it).

Cautiously optimistic

It's easy to be skeptical about NFTs. Yet I'm cautiously optimistic, for the simple reason that they represent a new way for creatives to make a living online.

For years, traditional media companies have resisted new network-based distribution strategies because they saw them—often correctly—as a threat to their business models. Most of the content on the internet was free, and what wasn't could easily be pirated or copied.

Your best option for getting paid for your content was to build a paywall, hire an army of lawyers to enforce copyright, or put yourself at the mercy of a huge social network, which could share some of its advertising revenue if the content became a global hit.

Digital subscriptions have become a way for creatives to regain control of their destiny. NFTs could be another way, one that offers the possibility for artists and musicians — and, yes, even journalists and authors — to transform content into unique digital objects. Furthermore, NFTs could erode the control of the business by intermediaries such as social media or e-commerce hubs.

In any case, it's worth a try. So please head over to my NFT auction at foundation.app/kevinroose, and let the bidding begin.