[1]Menu [2]Close ____________________ (BUTTON) * [3]Home * [4]COVID-19 * [5]Arts + Culture * [6]Economy + Business * [7]Education * [8]Environment + Energy * [9]Ethics + Religion * [10]Health * [11]Politics + Society * [12]Science + Technology * [13]En Español Edition [United States______] [14]The Conversation * * Edition: [15]Available editions United States * [16]Africa * [17]Australia * [18]Canada * [19]Canada (français) * [20]España * [21]France * [22]Global Perspectives * [23]Indonesia * [24]New Zealand * [25]United Kingdom * [26]Donate * [27]Get newsletter * [28]Become an author * [29]Sign up as a reader * [30]Sign in [31]The Conversation Search ____________________ (Search) Academic rigor, journalistic flair 1. [32]COVID-19 2. [33]Arts + Culture 3. [34]Economy + Business 4. [35]Education 5. [36]Environment + Energy 6. [37]Ethics + Religion 7. [38]Health 8. [39]Politics + Society 9. [40]Science + Technology NFTs are much bigger than an art fad – here’s how they could change the world April 26, 2021 6.24am EDT [41]James Bowden, University of Strathclyde , Edward Thomas Jones, Bangor University Authors 1. [42]James Bowden Lecturer in Financial Technology, University of Strathclyde 2. [43]Edward Thomas Jones Lecturer in Economics, Bangor University Disclosure statement The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment. Partners [44]Bangor University [45]University of Strathclyde [46]Bangor University and [47]University of Strathclyde provide funding as members of The Conversation UK. [48]View all partners Depiction of a house being turned into an NFT Homes fit for zeroes (and ones). [49]Julien Tromeur * [50]Email * [51]Twitter * [52]Facebook * [53]LinkedIn * [54]WhatsApp * [55]Messenger Sotheby’s has become the latest establishment name in art to dive into NFTs (non-fungible tokens) through its collaboration with anonymous [56]digital artist Pak and NFT marketplace [57]Nifty Gateway. The auction house sold [58]The Fungible Collection, a “novel collection of digital art redefining our understanding of value”, for more than [59]US$17 million (£12 million). Some pieces, such as “The Switch”, a monochrome 3D construction that is going to be changed by the artist at some unspecified moment in the future, received bids well in excess of [60]US$1 million. [61]For the uninitiated, NFTs are tokenised versions of assets that can be traded on a blockchain, the digital ledger technology behind cryptocurrencies like bitcoin and ethereum. Whereas one bitcoin is directly interchangeable with another, meaning they are fungible, NFTs are the opposite because the underlying assets are unique in some way and can’t be exchanged like for like. This uniqueness enabled Christie’s to sell digital artist Beeple’s [62]“Everydays” NFT in March for an eye-watering US$68 million. For those that don’t have that sort of money, NFTs are also being used for trading collectables like [63]baseball cards and [64]computer gaming items like swords and avatar skins. [65]The Switch, by Pak The Switch, by Pak. [66]Sotheby's Bubble trouble? The excitement around NFTs feeds a similar narrative to other recent price surges such as [67]GameStop and [68]dogecoin, in that these are [69]speculative bubbles brought about by [70]stimulus cheques in the US, lockdown boredom and low interest rates. Look no further than [71]celebrities like music star Grimes and YouTuber Logan Paul releasing their own flagship NFTs to ride the wave. Even Vignesh Sundaresan, the entrepreneur who bought Beeple’s record-breaking artwork, [72]sees investing in NFTs as a “huge risk” and “even crazier than investing in crypto”. But history also tells us to be careful about dismissing NFTs as a passing fad, since the importance of technological innovations often becomes clearer once the hype dies down. Many commentators dismissed the influx of tech companies around the dotcom bubble of the late 1990s, and the first wave of mass cryptocurrency enthusiasm in 2017, only to be proven hopelessly wrong when Amazon and bitcoin re-emerged. NFTs themselves are actually well down from their highs, with a [73]70% drop in average price since February. Perhaps this is less the bursting of a bubble than a “weeding out” of gimmicky tokens now that the initial hype has begun to die down. This phenomenon is captured well in US consultancy Gartner’s [74]hype cycle, which illustrates the typical progression of a new technology. With NFTs, we are probably emerging from the “peak of inflated expectations” on a journey towards the same “plateau of productivity” that Amazon reached a long time ago. Gartner’s hype cycle [75]Gartner's hype cycle [76]Gartner This ties in with what Austrian economist Joseph Schumpeter said about why capitalism works. Schumpeter viewed capitalism as a relentless churn of old into new, as the latest and most innovative enterprises replace those that came before – he called this “[77]creative destruction”. In this light, NFTs are the newcomers challenging how we perceive and register ownership of assets. And the tension between [78]innovation and incumbency also [79]contributes to the scepticism that always surrounds such new technologies. What happens next NFTs create opportunities for new business models that didn’t exist before. Artists can attach stipulations to an NFT that ensures they get some of the proceeds every time it gets resold, meaning they benefit if their work increases in value. Admittedly football teams have [80]been using similar contractual clauses when selling on players for a while, but NFTs remove the need to track an asset’s progress and enforce such entitlements on each sale. New art platforms, such as [81]Niio Art, are able to demonstrate in a really simple way that they own digital works. When customers borrow or buy art from the platform, they can display it on a screen in the knowledge that there is no issue with copyright or originality because the NFT and blockchain ensures that ownership is authentic. NFTs give musicians the potential [82]to provide enhanced media and special perks to their fans. And with sports memorabilia, [83]between 50% and 80% of items are thought to be fake. Putting these items into NFTs with a clear transaction history back to the creator could overcome this counterfeiting problem. IFRAME: [84]https://www.youtube.com/embed/E6iLV4q58QU?wmode=transparent&start=0 But beyond these fields, the potential of NFTs goes much further because they completely change the rules of ownership. Transactions in which ownership of something changes hands have usually depended on layers of middlemen to establish trust in the transaction, exchange contracts and ensure that money changes hands. None of this will be necessary in future. Transactions recorded on blockchains are reliable because the information cannot be changed. Smart contracts can be used in place of lawyers and escrow accounts to automatically ensure that money and assets change hands and both parties honour their agreements. NFTs convert assets into tokens so that they can move around within this system. This has the potential to completely transform markets like property and vehicles, for instance. NFTs could also be part of the solution in resolving issues with [85]land ownership. Only [86]30% of the global population has legally registered rights to their land and property. Those without clearly defined rights find it much harder to access finance and credit. Also, if more of our lives are spent in [87]virtual worlds in future, the things that we buy there will probably be bought and sold as NFTs too. There will be many other developments in this decentralised economy that have yet to be imagined. What we can say is that it will be a much more transparent and direct type of market than what we are used to. Those who think they are seeing a flash in the pan are unlikely to be prepared when it arrives. * [88]Dogecoin * [89]Digital art * [90]creative destruction * [91]GameStop * [92]NFTs * [93]non-fungible tokens Want to write? Write an article and join a growing community of more than 125,700 academics and researchers from 3,996 institutions. [94]Register now * [95]Community standards * [96]Republishing guidelines * [97]Friends of The Conversation * [98]Analytics * [99]Our feeds * [100]Donate * [101]Who we are * [102]Our charter * [103]Our team * [104]Partners and funders * [105]Resource for media * [106]Contact us * [107]En Español * * * [108]​ * [109]​ [110]Privacy policy [111]Terms and conditions [112]Corrections Copyright © 2010–2021, [113]The Conversation US, Inc. References Visible links 1. https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563 2. https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563 3. https://theconversation.com/us 4. https://theconversation.com/us/covid-19 5. https://theconversation.com/us/arts 6. https://theconversation.com/us/business 7. https://theconversation.com/us/education 8. https://theconversation.com/us/environment 9. https://theconversation.com/us/ethics 10. https://theconversation.com/us/health 11. https://theconversation.com/us/politics 12. https://theconversation.com/us/technology 13. https://theconversation.com/us/espanol 14. https://theconversation.com/us 15. https://theconversation.com/us 16. https://theconversation.com/africa 17. https://theconversation.com/au 18. https://theconversation.com/ca 19. https://theconversation.com/ca-fr 20. https://theconversation.com/es 21. https://theconversation.com/fr 22. https://theconversation.com/global 23. https://theconversation.com/id 24. https://theconversation.com/nz 25. https://theconversation.com/uk 26. https://donate.theconversation.com/us?utm_source=theconversation.com&utm_medium=website&utm_campaign=topbar 27. https://theconversation.com/us/newsletters/the-daily-3?utm_campaign=System&utm_content=newsletter&utm_medium=TopBar&utm_source=theconversation.com 28. https://theconversation.com/become-an-author 29. https://theconversation.com/sign_up?return_to=/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563 30. https://theconversation.com/sign_in?return_to=/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563 31. https://theconversation.com/us 32. https://theconversation.com/us/covid-19 33. https://theconversation.com/us/arts 34. https://theconversation.com/us/business 35. https://theconversation.com/us/education 36. https://theconversation.com/us/environment 37. https://theconversation.com/us/ethics 38. https://theconversation.com/us/health 39. https://theconversation.com/us/politics 40. https://theconversation.com/us/technology 41. https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563 42. https://theconversation.com/profiles/james-bowden-1202460 43. https://theconversation.com/profiles/edward-thomas-jones-257984 44. https://theconversation.com/institutions/bangor-university-1221 45. https://theconversation.com/institutions/university-of-strathclyde-1287 46. https://theconversation.com/institutions/bangor-university-1221 47. https://theconversation.com/institutions/university-of-strathclyde-1287 48. https://theconversation.com/us/partners 49. https://www.shutterstock.com/image-illustration/3d-illustration-abstract-background-real-estate-1933952156 50. mailto:?subject=NFTs are much bigger than an art fad – here's how they could change the world — The Conversation&body=Hi. I found an article that you might like: "NFTs are much bigger than an art fad – here's how they could change the world" — https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563 51. http://twitter.com/intent/tweet?text=NFTs+are+much+bigger+than+an+art+fad+– here's+how+they+could+change+the+world&url=https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563?utm_source=twitter&utm_medium=bylinetwitterbutton&utm_campaign=none&via=ConversationUK 52. http://www.facebook.com/sharer.php?u=https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563?utm_source=facebook&utm_medium=bylinefacebookbutton 53. http://www.linkedin.com/shareArticle?mini=true&source=The+Conversation&summary=Sotheby's+has+become+the+latest+establishment+name+in+art+to+dive+into+NFTs+(non-fungible+tokens)+through+its+collaboration+with+anonymous+[digital+artist+Pak](https://www.one37pm.com/nft/art/meet-...&title=NFTs+are+much+bigger+than+an+art+fad+– here's+how+they+could+change+the+world&url=https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563?utm_source=linkedin&utm_medium=bylinelinkedinbutton 54. whatsapp://send/?text=NFTs+are+much+bigger+than+an+art+fad+– here's+how+they+could+change+the+world+https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563?utm_source=whatsapp&utm_medium=bylinewhatsappbutton 55. fb-messenger://share/?link=https://theconversation.com/nfts-are-much-bigger-than-an-art-fad-heres-how-they-could-change-the-world-159563?utm_source=fb_messenger&utm_medium=bylinefb_messenger_button 56. https://www.one37pm.com/nft/art/meet-murat-pak-digital-artist 57. https://niftygateway.com/ 58. https://www.sothebys.com/en/digital-catalogues/the-fungible-collection-by-pak?locale=en&cmp=actn_CTP_gg_sea_tffc_onl_nft_pak_fungible_en_04-2021_int__ovr_searesp___general&s_kwcid=AL!13028!3!513206057188!p!!g!!sotheby's nft auction 59. https://www.sothebys.com/en/articles/17-million-realized-in-sothebys-first-nft-sale-with-digital-creator-pak?locale=en 60. https://niftygateway.com/itemdetail/primary/0xc7cc3e8c6b69dc272ccf64cbff4b7503cbf7c1c5/2 61. https://theconversation.com/what-are-nfts-and-why-are-people-paying-millions-for-them-157035 62. https://www.cnbc.com/2021/03/11/most-expensive-nft-ever-sold-auctions-for-over-60-million.html 63. https://www.sportspromedia.com/news/topps-mlb-baseball-card-nfts-digital-collectibles 64. https://www.financemagnates.com/cryptocurrency/news/nfts-are-creating-robust-economies-in-online-gaming-heres-how/ 65. https://images.theconversation.com/files/396517/original/file-20210422-23-ye7ltk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip 66. https://www.sothebys.com/en/digital-catalogues/the-fungible-collection-by-pak 67. https://theconversation.com/gamestop-hedge-fund-attacks-have-opened-up-powerful-new-front-against-wall-street-154284 68. https://theconversation.com/after-gamestop-the-rise-of-dogecoin-shows-us-how-memes-can-move-markets-154470 69. https://www.cnbc.com/video/2021/03/22/lse-law-professor-on-nft-craze-this-is-a-huge-bubble.html 70. https://www.bloomberg.com/news/articles/2021-04-03/nft-price-crash-stirs-debate-on-whether-stimulus-led-fad-is-over?sref=jKx7unHh 71. https://www.msn.com/en-gb/money/technology/nfts-how-celebrities-sell-crypto-digital-artworks-for-millions-and-why-people-are-angry-about-them/ar-BB1e9OJQ 72. https://www.cnbc.com/2021/04/07/buyer-of-69-million-dollar-beeple-art-metakovan-on-nfts.html 73. https://www.bloomberg.com/news/articles/2021-04-03/nft-price-crash-stirs-debate-on-whether-stimulus-led-fad-is-over 74. https://www.gartner.com/en/research/methodologies/gartner-hype-cycle 75. https://images.theconversation.com/files/396539/original/file-20210422-17-lyco96.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip 76. https://www.gartner.com/en/research/methodologies/gartner-hype-cycle 77. https://www.investopedia.com/terms/c/creativedestruction.asp 78. https://academic.oup.com/spp/article-abstract/46/4/632/5396727?redirectedFrom=fulltext 79. https://www.weforum.org/agenda/2016/07/why-do-people-resist-new-technologies-history-has-answer/ 80. https://theathletic.co.uk/2134724/2020/10/14/sell-on-fees-ollie-watkins-ben-godfrey-exeter-york/ 81. https://www.niio.com/site/ 82. https://www.rollingstone.com/pro/news/kings-of-leon-when-you-see-yourself-album-nft-crypto-1135192/ 83. https://www.nbcnews.com/news/us-news/foul-ball-did-nj-man-get-duped-buying-100k-bogus-n1019676 84. https://www.youtube.com/embed/E6iLV4q58QU?wmode=transparent&start=0 85. https://www.chicagotribune.com/news/ct-xpm-2006-08-27-0608270297-story.html 86. https://blogs.worldbank.org/voices/7-reasons-land-and-property-rights-be-top-global-agenda 87. https://decentraland.org/ 88. https://theconversation.com/topics/dogecoin-9337 89. https://theconversation.com/topics/digital-art-12733 90. https://theconversation.com/topics/creative-destruction-18486 91. https://theconversation.com/topics/gamestop-99332 92. https://theconversation.com/topics/nfts-100651 93. https://theconversation.com/topics/non-fungible-tokens-100652 94. https://theconversation.com/become-an-author 95. https://theconversation.com/us/community-standards 96. https://theconversation.com/us/republishing-guidelines 97. https://theconversation.com/us/friends 98. https://analytics.theconversation.com/us 99. https://theconversation.com/us/feeds 100. https://donate.theconversation.com/us?utm_source=theconversation.com&utm_medium=website&utm_campaign=footer 101. https://theconversation.com/us/who-we-are 102. https://theconversation.com/us/charter 103. https://theconversation.com/us/team 104. https://theconversation.com/us/partners 105. https://theconversation.com/us/resources-for-media 106. https://theconversation.com/us/contact-us 107. https://theconversation.com/us/espanol 108. https://www.instagram.com/theconversationdotcom 109. https://www.linkedin.com/company/conversationus 110. https://theconversation.com/us/privacy-policy 111. https://theconversation.com/us/terms-and-conditions 112. https://theconversation.com/us/corrections 113. https://theconversation.com/us/who-we-are Hidden links: 115. https://theconversation.com/us 116. https://facebook.com/theConversationUS 117. https://twitter.com/ConversationUS