LAUSANNE – In March 2021, the auction house Christie’s sold a JPEG file created by the artist Beeple for $69.3 million, a record for a digital artwork. The ownership of the “original” JPEG – entitled “Everydays: The First 5000 Days” – was secured as a non-fungible token, or NFT.
The sale made headlines, and NFTs have since become red-hot. Investors poured $27 billion into the market in 2021, and Meta, Facebook’s renamed parent company, now reportedly plans to allow users to create and sell NFTs. There’s just one problem: the NFT market will eventually collapse, for any of a host of reasons.
In essence, an NFT is a tradeable code attached to metadata, such as an image. A secure network of computers records the sale on a digital ledger (a blockchain), giving the buyer proof of both authenticity and ownership.
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