NFT – gimmick or potential?
NFTs have been a term that has come up again and again for some time – especially in connection with the Web3. The abbreviation, which stands for “non-fungible token”, describes a certificate or token of authenticity and ownership of a digital file. In this way, owners of NFTs effectively become owners of digital files. As far as the format is concerned, there is a lot of leeway, and even partial files or pixels are now being sold as NFTs.
NFTs and blockchain
NFTs are stored in so-called blockchains. As the name suggests, this is a database in which data records (blocks) are joined together one after the other to form a chain of data records (blockchain). Since the new blocks are lined up chronologically, a history of the inserted data records (blocks) is already apparent. What is particularly exciting is that the data records are not only stored centrally, but are sent to everyone who is a member of a blockchain system. This makes manipulation more difficult, because one can validate the authenticity of a data record across multiple systems. Encryption and the use of checksums additionally help to increase the security of the blockchain. The use of blockchains is probably particularly well known in connection with cryptocurrencies such as Bitcoins, but also in the discussion and development of the metaverse.
But back to NFTs
The connection between the acquisition and possession of an NFT and blockchain technology is so important because the latter can be used to prove the acquisition of a digital file in a legally secure way. All the information that identifies the owner of a digital file as such is stored here, because – due to the nature of the matter – this is certainly not quite easy when acquiring and distributing digital files by other means. An NFT thus becomes a certificate of ownership of a digital file, secured by the blockchain.
Example: Karin L. buys a digital painting as an NFT. She therefore receives the certificate that she is the owner of the digital image file. Since the information about the purchase, i.e. the transaction itself, is stored, verified and documented in the blockchain, she can prove in a legally secure way that this file belongs to her. Should another person now claim that the digital file belongs to her, Karin L. can prove that this is not the case. Attempts at manipulation are already made difficult by the fact that every member of the blockchain system has stored the transaction of Karin L.’s purchase as a decentralised copy in the blockchain.
Now Karin L. sells the image file to Thomas H. This transaction is also stored in the blockchain. Due to the chronological order of the data records, which is also documented in the blockchain, it can now also be proven who was the owner of the digital file at what time. Again, quite tamper-proof due to the decentralised data storage among all participants of a blockchain.
Of course, there are also weak points and, as with everything in the digital world, manipulation cannot be ruled out 100%. For example, if you have influence on more than half of the nodes within the blockchain, manipulation is quite conceivable. There are also certainly open questions with regard to data volumes, performance and storage. Anyone who is interested in this can find numerous platforms on the internet that discuss advantages and disadvantages.
The sense of NFTs
One might legitimately ask what the point of all this is. What is the point of buying a digital file for a lot of money in order to own it, when a digital file is, or at least can be, ephemeral, easily copied and available on a mass scale? Perhaps it becomes more understandable if we take the example of a painting again. A painting also exists in various forms: As an original, as an art print or even as a digital file for download. The original, however, exists only once. It is the original work, created with brush and paint from the hand of the artist himself or herself. Prints are also beautiful to look at, but they are “only” a copy of the actual work. Of course, one can now say that with a digital file there is no original work (except for the file itself, which was saved first). This is where the gallery comes into play. If the painting is hanging in a gallery, we assume we are seeing the original. We marvel at the picture painted by the great master Van Gogh himself. As laypeople, we can’t be 100% sure of this, but we trust that it is correct. However, we can also take photos of this painting, so we now have a picture of it ourselves, e.g. on our smartphone. Here, too, heaps of copies are made that we cannot control, but there is only one original. In Web3, the blockchain now becomes a gallery in which the NFT is the original work that belongs to only one person, even if many can view it or “photograph” it, i.e. copy it. The NFT, the certificate, proves the authenticity of this one file, similar to a certificate of authenticity for works of art.
Possibilities of use for publishers?
Now the exciting part: Are there opportunities for publishers? If you detach yourself from the perceived uncertainties about Web3 itself and cryptocurrencies, you can say: yes. Because even if it doesn’t seem to make sense at first glance to offer editorial content from one’s own publishing house as NFT, one should not directly close oneself off to potentials here either. As difficult as it is for non-digital natives to understand, there is a market for all kinds of formats of NFTs.
At DMEXCO 2022, I had the pleasure of talking to a blockchain expert whom I asked what opportunities he sees for publishers in the NFT market. He enthusiastically mentioned a few examples, for example the sale of article headlines or paragraphs. It is already being done with books, he continued. You can not only buy the cover of a novel, but also the characters within the plot, including their clothes. Of course, in the case of newspaper stories, we cannot sell the people involved, that would be more than questionable for ethical reasons alone. But the editorially created content could certainly be offered as NFT, not just the headlines for different channels and media.
DPR points out in its february magazine (#1/2/ 2023) that the French publisher 20 Minutes has made its first attempts at NFTs. Here, not only artworks were sold, but also exclusive insights directly into the newsroom of the publishing house via Discord. One NFT was sold for 280 Euros, the experimental quantity of 999 was sold out after 15 hours and the magazine 20 Minutes was created in Web3. It is now the largest Web3 magazine on the market.
Besides raising money, the process has other advantages. Via Discord, the publisher is in direct contact with the NFT holders. These can not only contribute their own content to be published in 20 Mint, but also serve as direct feedback of editorial content to have its relevance assessed directly by the “readers”. Since community building is also playing an increasingly important role for publishers and local editors, this creates a real win-win situation.
And what do we conclude from this now?
As always, the first request is: “Keep an open mind”. Even with topics that at first glance don’t seem to make sense for your own sector. Form project groups and invest a few hours in thinking about whether potentials could be seen, whether there are monetisation opportunities. Weigh the effort against the benefits and open yourself up to experimentation. Digitalisation will be our future and we need to get more and more involved with it. Only when we really get to grips with the issues will the ideas come what potentials they hold.