When news broke that celebrated Kenyan marathoner Eliud Kipchoge had auctioned two videos capturing his career’s highlights as Non-Fungible Tokens (NFTs) for KES4 million, many were at sea. They wondered why anyone would pay that much money for content that would still be readily available online, for viewing, downloading and screenshotting.
Even more puzzling was how the buyer intended to use the videos showing exploits of the greatest marathoner of all time in the 2018 Berlin Marathon and the 2019 Vienna Marathon, better known as INEOS 1:59 Challenge, when he set the world record as the fastest marathoner ever.
Unknown to many, the NFT craze had been sweeping the world for a while. Songs, videos and digital artwork are being auctioned for millions of dollars.
First things first, what are N-F-Ts?
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own. The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
An NFT is thus a unique and irreplaceable digital title for a piece of content that can be sold on bidding platforms but are non-refundable. Its value varies but cannot be used as a medium of exchange. NFTs are based on cryptocurrency and blockchain technology.
In recent times, one of the biggest NFT trades was the purchase of a JPG file made by Mike Winkelmann, a digital artist known as Beeple, for $69.3 million. It was the third-highest auction price received for a living artist and a new high for artwork that exists only digitally.
According to Njaramba Wanjau, a data science and digital media executive at Safaricom, NFTs offer an opportunity to monetise creative and artistic work by putting it in a simple, creative art form, leveraging new technology.
“Since NFTs are founded on smart contracts, they can be sold on digital platforms, while protecting copyrights. Their worth depends on what is being sold and the interest it generates,” Mr Wanjau explains.
This explains why the first ever tweet by Twitter CEO and Co-founder, Jack Dorsey, was auctioned as an NFT for KES311 million ($2.9 million).
Frank Deya, a director of Flagship Technologies, which works in deploying blockchain technology, states that the beauty of NFTs lies in the ability of creatives to sell their work directly to fans and supporters.
“It provides them an opportunity to bypass middlemen in the value chain of their art. Additionally, musicians can sell a tokenized version of their event tickets which can be verified on the blockchain thereby eliminating fraud or fake tickets at their events,” says Mr Deya.
He argues that since an NFT’s value is extrinsic, due to its authenticity, scarcity and transferability across the world, it has a pool of potential buyers willing to pay handsomely for it.
“Also, because of its immutability (unchangeable); its metadata cannot be changed and hence its utility. NFT collectors see a future for the tokens in increased real-world integration,” he adds.
Besides transferring ownership of the content from the copyright owner to the buyer, NFTs can be resold in a secondary market. Even Kipchoge still stands a chance to reap from his recently sold NFTs, for the long-term, since ownership is traceable.
“NFTs can be resold but the original owner still earns in perpetuity,” Mr Wanjau says.
Whereas it has been argued that NFTs could just be another fad or bubble, experts insist that it is the future.
“Think of it as a financial instrument enabling artists to monetise their work. Through it, they can get a bang for their buck, playing on cryptocurrency trends. It calls for a paradigm shift, for them to set themselves for a long-term future,” Mr Wanjau advises.
On his part, Mr Deya argues: “NFTs are here to stay. They will create new business models that have not been explored. Artists will benefit if the value of their NFTs increase over time. It will eliminate counterfeiting original works. It will create a reliable level of transparency and direct marketing that will immensely benefit creators in the future.”
How then can artistes and other content creators in Africa jump onto the NFT bandwagon to monitise their work on the platform?
Mr Deya says NFT marketplaces are open-source platforms accessible to anyone, anywhere; with some of the most popular ones including: OpenSea, Rarible, SuperRare, Foundation, AtomicMarket, Myth Market, BakerySwap, KnownOrigin, Enjin Marketplace, Portion.
“Creating NFTs takes little to no technical knowledge on these marketplaces. To start creating an NFT, you will first need to connect your crypto wallet to an NFT marketplace of your choice. The wallet address will be your login info, so you will never need to share any other details. You will then upload your artwork and finalize the process,” he explains.
To effectively leverage benefits of NFTs, Mr Wanjau counsels, artists need to recognize that their work is valuable. They also need to get interested in understanding the technology which is built on transparency and trust in platforms.
“Most importantly, they should find an artform that they can creatively and authentically create. Then they need to market it to build interest. An artist may have the best work ever but if they do not market it, it will be like winking in the dark – no one will notice and it will not take off when it goes on auction,” Mr Wanjau says.
However, Prof Bitange Ndemo, writing in Business Daily, warned that the challenge that now exists is establishing authenticity and integrity of those who lay claim to rights of original representations to be converted into NFTs.
“With so much creative works out there, it is a near impossibility to trace each one of them to the original creators. There is need to develop regulated registries that can be used to validate sources and provenance of the work. And, possibly protect the buyers against fraudsters and this can disrupt the creative sector in a positive way,” Prof Ndemo argued.