Since last March, NFTs (non-fungible tokens) have become the new universal digital rights economy. Their fame was first established in the art world, thanks to the work in jpg format – a collage made up of 5,000 images created over 13 years – by the artist Beeple, which was auctioned at Christie’s for almost 70 million dollars on 11 March 2021, and then strengthened by sports and other market segments such as real estate.
WHAT ARE NFTS?
NFTs are universal digital certificates that demonstrate, for the holder of a non-fungible token, a unique right to a work through a smart contract. An NFT can be paired with any digital object: a video, a photo, a jpg, a gif, a text, an article, an audio file and, in general, anything that is digital or can be converted to a digital format.
A product certified with an NFT bears the author’s signature, so it is possible to prove its authenticity and identify as “copies” only those in turn signed with an NFT.
Whether it is art, sports or other market sectors, where one can be applied, the result is a new form of crystallised certification.
The NFT system is composed of several essential elements: first of all the digital token with its own unique, unrepeatable and indivisible value, which includes a series of non-modifiable information. A token is a set of digital information within a blockchain, in the case of NFTs the Ethereum blockchain, which grants a right to a particular party. For a simple description of the mechanism that governs the use and the characteristics of an NFT, it is sufficient to say that a non-fungible token is a contract of ownership of a work or of a good that is configured through a smart contract (clause of sale), due to which the buyer who invests in an NFT acquires a virtual “document” that attests his or her right to the work concerned.
WHAT IS A BLOCKCHAIN?
It is a shared, immutable digital ledger where data transactions are stored and cannot be altered, manipulated or deleted. It is a system designed to ensure traceability of transfers, transparency and verifiability and is considered a safe, reliable system. Before the birth of the blockchain, in fact, any “object” on the Internet was easily reproducible, so it was impossible to guarantee, for example, the authenticity of a digital work of art. With the arrival of blockchain, a way was found to affix information about the digital product to a digital ledger – like a notarial deed. This information is therefore unmodifiable, public and establishes the uniqueness of the product and its irreproducibility.
Thus began the race to produce NFT-certified works of art, and Crypto Art was born, driving an outright boom in the last year, with digital works and objects sold at auction for hundreds or even millions of euros.
THE SORARE CASE
If the first true NFT is related to the art world, some companies have also decided to manage and invest in non-fungible tokens in the sporting world. The most striking case is that of e-football platform Sorare, which seems to have identified a multi-billion dollar market opportunity. Sorare’s blockchain-based market segments are sports cards and global fantasy sports.
Sorare sports cards are NFTs, which means each card is unique and its ownership is verifiable via the Ethereum blockchain. Through collecting, owning, playing on a proprietary platform, and trading these digital collectible cards, Sorare is designing an unprecedented gaming experience that allows them to build connections between the digital and real worlds by allowing fans to access exclusive content and services.
In addition, Sorare has struck important partnerships with some of the most important football clubs in Europe and has licensed players from more than 180 clubs. The company’s ambition is to partner with all 20 football leagues globally and the top 50 football teams in the world, not only in men’s but also in women’s football, so as to generate new traceable, sustainable revenue streams.
NEW MARKET OR STATUS SYMBOL?
The fundamental question for experts is whether NFTs will revolutionise the market, as it was for the Internet, or if it is a temporary phenomenon that can be considered more a status symbol, a transitory fashion, than an actual digital revolution.
The phenomenon is very recent, so it is still too early to draw firm conclusions. However, it remains difficult to determine what people who buy an NFT actually buy. It is certainly a digital right, but not an irreproducible work. Whatever it is and whatever its digital format, it can be viewed anywhere there is a PC connected to the Internet and the author is free to produce and sell other authentic NFT versions, obviously not the copyright, which will be retained by the artist or the rights holder.
What is evident to the less experienced is how much the NFT phenomenon is linked to the concept of exclusivity, reserved for the “pockets” of a few collectors. More than great opportunities related to new digital patronage, it could be mainly a question of new, exclusive status symbols.