What is a NFT? Arcane Mystery Revealed

Despite exponential progress in our scientific understanding, there remain deeply impenetrable unknowns such as “How did life begin?”, “Are we alone in the universe?” and “What is a NFT?”.

This post will attempt to lift up a veil of secrecy and expose to the greater public a cabalistic knowledge that so far has revealed itself only to the crypto-initiated.

Our first postulate: “To understand NFTs is to understand blockchain.”

What is a “blockchain”?

A blockchain is a bit like a database. But instead of sitting on a computer or a server it is “decentralised”. Picture a network of computers that have each a copy of the “database”. They can store, validate and share data among each other so that the copies are always updated and identical. There is no central authority that decides what goes in the database but it has a program that makes sure that the information that it contains is valid and should be recorded.

When information is submitted onto a blockchain and is validated by the network, it will be aggregated with other information into a block of information. When the block is full, another block is created and automatically linked to the previous block, forming a chain. Hence the term “blockchain”.

When information is recorded in a block, it cannot be changed anymore.

All information that is recorded onto a blockchain can be publicly verified by anyone and we can see exactly what has been created, by whom, and by when.

If someone tries to tamper with information in a block, the other computers that are part of the network will automatically cross-reference the information they have about that block, and quickly notice that something is not right, thus preventing the tampered information to be validated and recorded.

There are many types of public or private blockchain such as Ethereum, Hyperledger Fabric or Tezos, each using different methods to create, store and validate information, but overall they use the same principles described above.

What is a “NFT”?

NFT stands for Non-Fungible Token.

A token is a set of information that can be aggregated into a block too. A token can contain instructions that are automatically executed when some conditions are met (known as a “smart contract”). More broadly, a token represent a digital asset and its ownership.

A fungible token is for assets that can be divided and exchanged for a similar asset of the same value in a transaction, and it does not matter which exact one is used. For example imagine that you want to send a dollar to a friend to buy an ice-cream. It does not matter which specific dollar from your account will be used in this transaction. A dollar is a dollar and a Bitcoin is a Bitcoin.

A Non-Fungible Token is for assets that are unique. They contain or represent a single asset that is different from the others. And this matters in a transaction. For example a video file, a picture or an item in a game such as a magical sword with special properties. The NFT will contain information about the digital asset, its creator and owner, a unique token ID as well as smart contract instructions. Often it will not contain the actual digital asset as the file would be too large, and the process of creating the token too costly. But it will contain a link that point to where the file is hosted.

A few words about “smart contracts” in the context of NFTs: A smart contract is a program that contains instructions that are automatically executed when the conditions are fulfilled. For example you could embed an instruction to give 10% royalty to the original creator of an NFT for all future sales. Automatically, when the NFT is sold and resold, the creator will receive in his crypto-wallet the equivalent of 10% of the sales price, in perpetuity. This is done without any need for human intervention.

Because of their properties: hard to tamper with, traceable, easy to verify, allocated to a single owner, able to execute instructions automatically… NFTs are used in a variety of applications. For example a NFT could replace a movie ticket, or be used as a certificate of authenticity for a digital or a physical artwork. Some people use NFTs to fractionalise ownership of a painting for example. They will create a hundred unique NFTs that represent 1/100th ownership of the painting. And these NFTs could be sold and traded on a market place, as “virtual shares” of the artwork.

Typically, when it comes to digital art, when you purchase a NFT you will become the official owner of a unique digital file that is linked to the NFT. The NFT will be automatically transferred to your wallet and you will be able to access the digital file to view it, download it and display it.

What is a wallet? This is where you will receive and store your crypto-currency and NFTs. It is a bit like a wallet for your cash and cards, except that these are digital wallets. You can easily set one up online or should you prefer, buy one as a hardware that looks like the USB key you used to store data. Interestingly, the wallet will not store the actual NFT you purchase (it is on the blockchain, remember?) but it will store the exact location of where your NFT is on the blockchain, and give you exclusive access to it so that you can transfer or sell it.

Display options for digital artwork range from projecting the artwork on a wall and using monitors, tablets, or smart TVs like the Samsung Frame or LG OLED Gallery Design TV that are optimised for the display of such artwork. There are a number of applications for you to display your artwork on these devices, whether you decide to stream it or download it. It is no more difficult that showing a picture or a movie on your laptop. Some NFT Artwork come as programs that will generate artwork or allow for interactivity. In that case you will be installing the program on your computer first then run it.

And that's all we will share at the moment. Congratulations: You are now initiated!

We hope that this post contributed to demystify NFTs. Unlike secret traditions passed on orally during exclusive and mysterious rituals, we would encourage you to share this post if you think it was enlightening enough.

If you have specific questions or feel we could have done a better job explaining some of these complex points in an even simpler manner, please contact us. And if you are interested in NFTs from an artistic perspective, you might find our short post on “Art that speaks the language of the time” worth a read.

Art that speaks the language of the time

Particles - Pattern 8 by Damien Borowik

NFT is a polarizing word. For some, it encapsulates a newfound libertarian freedom where individuals can create and monetize without the need for central authorities. For others, the word has been tainted by scams, rug pulls and false promises. When associated with the word “art” it could become downright offensive.

Digital art is not new. Monetizing it at scale is.

Artists have been using computers to produce art on screen since the 50s. The struggle since has been its monetization. Unless they were selling their art with a physical display, whether printed out or bundled with a screen, digital artists had a hard time making a living. Most used their talents in the commercial world instead. Here is the irony: While our life became more digitised and virtualised, what would make digital art naturally more valuable was missing: scarcity and authenticity. Why should I pay when I can just get a free, identical copy?

Then NFTs came along and solve this problem for artists. It quickly became a gold rush, rife with speculations, hits and a lot of misses. Many have been burnt and are still reeling. Some decided to sit on the fence, others developed an allergic reaction, and a few have profited handsomely.

Real art touches people and that is universal, regardless of technology.

Sylvain Levy, of the eponymous DSL Collection wisely said: ”Art should be seen, and for that to happen it needs to speak the language of its time.”

Whether we argue that BAYC is art or not is irrelevant to the fact that we are spending more of our time and money on virtual assets. It follows that while there are hundreds of millions of people happy to purchase in-game upgrades, exclusive profile pictures or swanky villas on the metaverse, there will be a few among them that will be looking for art for art sake. The kind you don’t buy just to flip but because like all good art, what you saw, what you read and what you heard touched you.

This is why we are passionately developing Block Meister. We think that beyond the quest for “utility” and “quick riches”, they are a few NFT-savvy collectors who are curious about art, or already committed to it, and there are a few traditional art collectors who are keen to keep up with the times.

These two groups have more in common than what they think. As a prelude to our platform launch, in the next few weeks, we will feature some digital artists we like and respect to help bridge that gap.

Expect to read about established artists like Miguel Chevalier, Refik Anadol, Tyler Hobbs or Du Zhen Jun and emerging ones, digitally natives or not, all keen to explore new virtual creative territories.

And if you believe in our vision, we would invite you to spend 15 mins with us for an exclusive preview, to help us put the finishing touches to what we hope will make a meaningful and beautiful dent in the universe of Art.

NFTs, Defi, Metaverse… What Future for Museums? An Exclusive - Part 2

What can museums do to stay connected to the NFT generation? How can they prosper in the Metaverse? Can they cope with the transformative investment required? These are some of the recurring questions that come up in our conversations with museum owners and curators. We had the privilege to discuss these topics with Dr. Sandro Debono, a Museum Thinker, Culture Consultant, and Writer who provided us with insights, and foresight into the future of museums.

This is the second and final part of our interview.

• Dr. Sandro Debono: SD

• Block Meister (Etienne Verbist and Joël Céré): BM

BM: The Metaverse, blockchain… These could be huge investments for museums who are already short of funds. How will they be able to fund that to stay relevant?

SD: Covid reminded us of the problems that were already there but that we had chosen to ignore. Financial problems were there before COVID came around so was public relevance. In my opinion COVID has made us aware of the absurdity that a very good percentage of a museum’s revenue depend only on one revenue stream: ticketing. How many businesses would go for that risk?

There are museums in Singapore that have created spaces for start-ups to produce content, including NFTs. Why not? This is a new point of departure for a museum to become a producer of film or content. There are museums that have been working on patents with creatives. The big museums such as Tate have done it for quite some time. They get in touch with an up-and-coming designer, invite him to create products for them and they sell them. 10 years ago, they already had a turnover of $8M to $10M. There are so many possibilities. Think of the richness of data and knowledge that museums have.

Let alone that you only have 10% on display in terms of physical assets. 90% is in storage waiting to be used. In Rotterdam, there's this very interesting project where for the first time, the storage facility has taken the vestiges of a museum. It's a beautiful building. Very modern, very contemporary and it's a storage facility. You can visit, there are lectures, a cafeteria and so on and so forth. What museums need to think about is their huge potential, the huge assets that they hold in trust. And what they can do with these assets beyond exhibitions or lectures.

BM: It seems obvious that museums are sitting on a treasure chest of IP, heritage and content. Why are they not changing? What's stopping them?

SD: Most of the work I do today, which is essentially museum consultancy is essentially this. To help museum think. There are many reasons that are stopping them: First, there is tradition. It's much more difficult for the Louvres, for example, to do things than it is for a small museum in the Netherlands. I'm not saying Le Louvres is not innovative, they are doing interesting things too, but not to the full potential that a small museum can do.

And then there's the Ben Uri space. It is a tiny museum that competes for attention against the giants in London. They have reinvented themselves to create their own space, essentially using technology, way before COVID. They had the agility to adjust, adapt and not to say: “But we've always done it that way”. Now it is time to change. The museum idea was invented 2 centuries ago. Much has changed since.

BM: Could one of the reasons why museums are often reluctant to change is that they do not have many business people or entrepreneurial types as directors?

SD: Most museums are staffed with talents from traditional backgrounds. Fantastic in terms of governance, knowledge, etc, but they are not business minded. Museums need more entrepreneurs on their boards. Let's take digital for example. How do museums think about digital? They will get a digital department. They might hire the best people in town to create and invent. What happens next? They get siloed because the rest of the of the org chart doesn't understand the language of digital.

There is a big problem with translation, and it happens all the time. We need to talk about digital maturity. There's an interesting report published by the Knight Foundation stating that less than 10% of museum leadership comes with a digital background. The challenge starts with how such skills are bundled, or not, in education. Covid did not create problems for us. We had created them ourselves and we ignored them because we knew we will survive. BM: If you had a magic wand, what would you do to help museums see the opportunities we are discussing and seize them?

SD: Getting museums to understand that tradition is not cast in stone. I’d like to change the mindset. What really happened in those museums that came up with brilliant ideas? For example, Nathalie Bondil went viral on social media in Canada in 2018 for suggesting that doctors prescribe a visit to the museum as part of a cure. It's been done in Europe now, but the Canadians were ahead by many years. This campaign started because there was someone with a vision. Now the problem for those people is to have the right support. When that is lacking, you really need to push hard and to literally contaminate to get people to move out of their comfort zone, which is human nature. It's not easy because it's a culture change. And sometimes when these innovators move out, things tend to retract again. Systemic change is a challenge. It can be done but you need to keep working at it. It's always three steps forward, two steps back. Three steps forward. two steps back. It is not going to be fast.

Museums can be true to their values yet still be able to reinvent what they do. But you need to know where to plant the right seeds in the right pots.

This is the last part of an exclusive interview with Dr Sandro Debono. If you have questions you would like to ask, do not hesitate to contact us.