Marc Beckman - The Comprehensive Guide to NFTs, Digital Artwork, and Blockchain Technology

This book is for information purposes only. Nothing in it is intended to be financial or investment advice. Seek a duly licensed professional for any kind of financial advice.

Copyright 2021 by Marc Beckman

Photographs are courtesy of Getty and Shutterstock with the following exceptions:

: Photo by Jun Lu

: Photo by Stephen Han

: 3D render by Imran Potato

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Library of Congress Cataloging-in-Publication Data is available on file.

Cover design by David Ter-Avanesyan

Cover image from Shutterstock

Interior design by Chris Schultz

Print ISBN: 978-1-5107-6842-0

Ebook ISBN: 978-1-5107-6844-4

Printed in the United States of America

To my very special wife and best friend, Alice.
And to my two amazing children, Jude and Damaris.

PART ONE
MEET YOUR GUIDE

PART TWO
AN NFT... BUT WHAT KIND OF NFT

PART THREE
PATHS FORWARD FOR THE NFT

PART FOUR
THE IMPACT OF NFTS ACROSS INDUSTRIES: WHAT TO EXPECT IN THE YEARS AHEAD

PART FIVE
NEW OPPORTUNITIES FOR INVESTING

Authors Note

T his is a book about a new and emerging technology. As such, it is almost certain that by the time you read these pages, the world of Non-Fungible Tokens (NFTs) will have changed. More specifically, it will have grown, evolved, and expanded into new areas, and in ways that include new players and technologies. The record prices for NFT works of art mentioned in this book may be broken. The largest and most lucrative partnerships with artists, athletes, and fashion brands to create NFTs may have been superseded and eclipsed. Businesses launching their own NFTs mayand, in fact, probably willhave accelerated at a remarkable pace since the time of this writing, and created NFT-based innovations and products that are not included here.

However, this is also a book about the basic, fundamental truths of NFTswhat they are, where and how they can be applied, and where they hold the potential to create powerful disruptions in our lives. These fundamentals will not change as time goes by. Rather, they will be used in exciting new ways, and in new areas, and this will be happening all the time... including after this book goes to press.

As champions of NFTs, we wouldnt have it any other way.

Marc Beckman

Introduction

W hat just happened?

This was the question that seemed to echo across the art worldand then across the entire worldas news spread of a remarkable and unusual sale by Christies auction house in early March of 2021. A digital collage entitled Everydays: The First 5000 Days, by an American artist known only as Beeple, had sold for a staggering $69.3 million. The sale price alone made this transaction remarkable news. But there was something more. Something that took this transaction from the realm of the rare into the land of the positively game changing.

What had been sold by Christies was not a canvas. Or a print. Or a sculpture. Or anything that could be touched or felt or held in someones hand.

What had just sold for this staggering sum had come in the form of an NFT, or non-fungible token. Technically speaking, it was a digital file, but not just any digital file. The artwork contained a token verifying the unique nature of the piece, and tracing the record of the works ownership back to the very circumstance of its creation. The token meant that the work could never be altered or changed by anyone save the new ownerwho turned out to be a famous blockchain investorand that no facsimile or reproduction of the work could ever truly be created, because any reproduction would lack this unique, distinguishing token.

Confused?

Many in the art world certainly were, at least initially. But this sense of bemusement was soon followed by a creeping feeling that something very important had just occurred something with the potential to change transactionsand even the very notion of ownershipforever.

These are, after all, times of remarkable change... especially in the digital world.

The rise of cryptocurrency is revolutionizing how payments are executed, while at the same time building an entirely new class of investors. Crypto is also creating a world of finance and financial transactions that are free from government regulation in ways that have never before been possible. With the value of digital tokens like Bitcoin hitting middle five figures, even entities that had been skeptical of the utility of cryptocurrency (or who had downright called it a scam) are now changing their tunes and rushing to invest.

Stepping back for an even wider view, blockchainthe mechanism that underpins both cryptocurrency and NFTs is advancing the technology used to verify who created something, who owns something (digital or otherwise), and where that something came from. With blockchain, the ownership history of a piece of currency is baked into the currency itself, and is accessible to anyone who examines it.

Imagine you could take a dollar out of your wallet and immediately know every person who had used that dollar, the nature of every transaction itd been used for, and that you could see back to the very moment when the bill was printed.

In the real world, you can exchange a dollar bill with your friend for another dollar, and the contents of your respective wallets will befor all practical purposesessentially unchanged. Neither of your dollars is going to be more valuable than the other. And the history of both dollars essentially remains a mystery. You dont know where it came from, or how it has been used. And you probably have the same chance of being able to guess if the dollar is real, or if it has been counterfeited.

But not so with NFTs.

This is the NF part of an NFT. Its non-fungible. That means you cant exchange it for something like it somewhere else, and have everything be exactly as it was.

Many things of value are fungible, especially cash or coin money. But with the rise of crypto, that is going to change for currency, but also for artworks, for collectibles, and for digital items of all sorts.

As the art world learned after the sale of Beeples collage, an NFT is value because it is an utterly unique item, and this fact is verifiable. An NFT is a custodian of its own uniqueness. It can self-verify as a one-of-a-kind work of art. (Like a counterfeit detector can show that a bill is authentic, an NFT does this for itself.) An NFT can tell its own story, and it can do that for as long as it exists.