Ye Olde CIO Explains It All
This Week: NFTs-what are they, and are they another dang thing CIOs should worry about?
So…What are NFTs?
Well that’s fairly unhelpful!
Sorry. Basically, an NFT is a way of recording a piece of digital content on blockchain, making it unique.
Sounds useless. There’s no revenue there.
There’s quite a bit of money, actually. This year Christie’s sold a digital artwork NFT for $69 million. https://www.nbcnews.com/business/business-news/digital-artwork-sells-record-60-million-christie-s-first-nft-n1260544
That’s crazy, isn’t it? It’s another one of those crazy internet things, no?
Actually, no. It’s a business model that’s worked for a very long time in the art world, for example. Take Andy Warhol’s panda print. If you have an officially licensed poster of it you bought at Spencer Gifts when you were a teenager, it’s worth…well, we’ll give you $7 for the frame. If, on the other hand, you have one of the 10 numbered limited editions…that’s currently worth a cool $750,000.
We don’t sell art
That’s just an example of the Real World origin of one NFT market, and a small one at that. There are booming NFT markets in collectables, for example. Take a look at the National Basketball Association’s Top Shot, for example. Sports have always had trading cards; the NBA is making digital trading cards after exciting game moments, saving them on NFTs, selling them, then providing a market for customers to buy, sell and trade them. There are more than 800,000 Top Shot accounts, with $500 million in sales. https://www.theverge.com/22348858/nba-nft-top-shot-dapper-labs
We’re not a basketball league
Truth. But the National Basketball Association is not making money from NFTs as a sports league. They are making money from NFTs as a content publisher. If you publish content, NFTs are a game-changer for your business. The internet has body slammed content businesses in large part because it made all content ubiquitous. If a newspaper printed a story, you had to buy a copy of the paper to read it. If a television station created a video, you had to watch the station – and its advertising – to see it. Now the second the video is posted it’s on YouTube, TicTok, Vimeo…and getting advertising views for them.
What’s this about NFTs destroying the environment?
Most NFTs use cryptocurrencies, which are created using a process called mining. Mining requires a ton of power, which impacts the environment. More on this next week in Cryptocurrencies-what are they, and are they another dang thing CIOs should worry about?
Christopher J Feola is a SIM DFW Fellow. He welcomes comments and questions at Chris (at) Feolayden.com
The Fellows Blog is posted every Monday except holidays by the SIM DFW Chapter Fellows.