If the phrase “non-fungible token” (a.k.a. NFT) has you scratching your head, you’re not alone. Legendary auction house Christie’s recently sold a digital artwork by Beeple for nearly $70 million—but the owners won’t have a pretty new thing to hang on their wall. They received instead an NFT, a certificate of ownership, for their money. And anybody can go look at his property, just search for it on Google.
Fortune’s Robert Hackett says his head “has been perpetually exploding in slow motion” since he started dabbling in this world. And Hackett is an expert on blockchain and all things crypto.
Hackett joined Michal Lev-Ram and Brian O’Keefe, the hosts of Fortune Brainstorm, a podcast about how technology is changing our lives, to discuss NFTs and why people are shelling out money in order to get ownership of tweets, digital marijuana, recordings of one man’s flatulence, and more.
The basics: An NFT is linked to a cryptocurrency but “it’s like a digital certificate that says you are the owner of a certain thing, some kind of digital content,” says Hackett. “So basically, anything that is data can be logged on a blockchain and its ownership be represented by an NFT.”
Still confused? Hackett adds that NFTs are like Super Bowl tickets. And, on a ticket-to-ticket comparison, “a movie theater ticket that’s expired is not going to be the same price as a ticket to go see the next Super Bowl. These are two totally different things, even though they’re both tickets. And [an NFT is] still a token, so you would hold it in your [crypto] wallet, basically.”
Noah Davis, the Christie’s specialist in postwar and contemporary art who oversaw the recent auction is also on the show.
Davis says that Christie’s opened the bidding at $100, “knowing that that was an extremely low starting point, and expecting that would cause a bit of a frenzy. But I did not imagine it would be as intense as it was. Within eight minutes, we went from $100 to more than a million dollars.”
And, he adds, of the 100 bids placed, “only three of those bidders were previously known to Christie’s.”
Caty Tedman, head of partnerships at Dapper Labs (a.k.a. the people who unleashed CryptoKitties on the world), rounded out the episode. She spoke with Fortune’s Lev-Ram about why the NFT space is experiencing so much growth.
Tedman says that people have just always collected things and that her company and others “use blockchain to create verifiable scarcity to the digital assets we’re creating. And that just means that you can be sure that if you buy something that says it’s one of 49, it’s truly one of 49.”
And scarcity, of course, is what gives a collectible its value.
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