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What are NFTs and why are some selling for millions?

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Laleh Samarbakhsh of Ryerson University explains what you need to know about the latest crypto trend and what the future could hold for NFTs.

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A version of this article was originally published by The Conversation (CC BY-ND 4.0)

Last week, Christie’s sold a digital collage of images called ‘Everydays: The First 5000 Days’ for $69.3m dollars. This week, Elon Musk said he’d sell a tweet of his as an NFT, which contains a song about NFTs.

The bidding on Musk’s tweet topped $1m – he has since tweeted, “Actually, doesn’t feel quite right selling this. Will pass.” – and millions more are pouring into the market. Sites like NBA Top Shot (where you can buy, sell and trade digital NBA cards) have individual cards selling for over $200,000.

It might sound ridiculous but the explosive market of crypto-collectibles and crypto-art is no joke. I investigate cryptocurrencies and have academic publications on bitcoin markets. To help you understand what an NFT is and why they’re becoming so popular, here’s an explainer to make sense of it all.

What is an NFT?

A non-fungible token (NFT) is a digital file with verified identity and ownership. This verification is done using blockchain technology. Blockchain technology, simply put, is an un-hackable system based on the mathematics of cryptography. So, that’s why you hear a lot of ‘crypto’ when referring to NFTs – crypto-art, crypto-collectibles etc.

What is fungibility?

Fungibility is the ability of an asset to be interchanged with other individual assets of the same kind; it implies equal value between the assets. If you own a fungible asset you can readily interchange it for another of a similar kind. Fungible assets simplify the exchange and trade processes, and the best example would be (you guessed it) money.

Is NFT the same as bitcoin?

This is where I can explain and emphasise the ‘non-fungibility’ property of NFTs. The main difference between NFTs and bitcoins is the fact that bitcoins are limited and fungible (you can trade one bitcoin with another and both have the same value and price).

NFTs are unique but unlimited, and non-fungible (no two artworks are the same). While NFTs can appreciate in value (just like real estate), they cannot be interchanged for another NFT.

What does this mean for the future of money?

While not directly related to NFTs, it’s important to mention some properties of money. Among many properties, money has to be fungible (one unit is viewed as interchangeable as another), and divisible (can be divided into smaller units of value). NFTs are not fungible and while bitcoin is fungible, it is not divisible.

For example, a single dollar is easily convertible into four quarters or ten dimes, but currently you cannot divide one bitcoin into smaller units. In fact, fungibility and divisibility are part of five requirements for a currency to exist in a regulated economy.

Why are NFTs being valued?

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The importance of NFTs lies in providing the ability to securely value, purchase and exchange digital art using a digital ledger. NFTs started in online gaming, later with Nike’s patenting of its authenticity (CryptoKicks) and then by the famous Christie’s auction embracing NFT valuation of a digital art piece.

NFTs are commonly created by uploading files, such as digital artwork, to an auction market. Just like any other form of art, NFTs are not mutually interchangeable, making them more like ‘collectible’ items.

The platform (typically Ethereum) allows the digital art to be ‘tokenised’ and for the ownership to be safely stored using a decentralised, open-source blockchain (that is, anyone can check the ledger), featuring smart contract functionality. This means the traditional role of a ‘middle man’ for selling the art is now digitised.

Is owning the NFTs the same as owning the copyright?

No, owning the NFT doesn’t grant you the copyright to the art; they are distinct from one another. The ownership of the NFT is established using a digital ledger, which anyone can access because it is stored openly. This ledger tracks who owns an NFT and ensures that the NFT can’t be duplicated or tampered with, essentially a smart contract.

What does the future hold for NFTs?

It is undeniable that digital assets and blockchain technology are changing the future of trade. As a result, NFTs are also at the helm of this positive growth. However, just like other examples in history (eg the Dutch Tulip, the dot-com bubble, etc), certain valuations may see the need for future corrections depending on socioeconomic desires and the chance of a bubble.

Every generation has its own niche attachment to certain valuations whether for vanity or other reasons. NFTs are currently very popular among younger generations, but whether this generation will have the economic power to purchase or find use for them in the future, is both a social and economic question.

For NFTs, the true potential is yet to be uncovered. Whether big industry players in art, design or fashion will buy into it or not is also yet to be seen. One thing is for sure, NFTs did open the door for many digital artists to be identified and valued, and the smart contract functionalities of the blockchain technology will be used in future valuations of many assets.

The Conversation

By Dr Laleh Samarbakhsh

Dr Laleh Samarbakhsh is associate professor of finance at Ryerson University in Toronto, Canada.





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2021 iPhone photography awards – in pictures | Technology

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The 14th annual iPhone photography awards offer glimpses of beauty, hope and the endurance of the human spirit. Out of thousands of submissions, photojournalist Istvan Kerekes of Hungary was named the grand prize winner for his image Transylvanian Shepherds. In it, two rugged shepherds traverse an equally rugged industrial landscape, bearing a pair of lambs in their arms.

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With Alphabet’s legendary commitment to products, we can’t wait to see what its robotics biz Intrinsic achieves • The Register

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Alphabet today launched its latest tech startup, Intrinsic, which aims to build commercial software that will power industrial robots.

Intrinsic will focus on developing software control tools for industrial robots used in manufacturing, we’re told. Its pitch is that the days of humans having to manually program and adjust a robot’s every move are over, and that mechanical bots should be more autonomous and smart, thanks to advances in artificial intelligence and leaps in training techniques.

This could make robots easier to direct – give them a task, and they’ll figure out the specifics – and more efficient – the AI can work out the best way to achieve its goal.

“Over the last few years, our team has been exploring how to give industrial robots the ability to sense, learn, and automatically make adjustments as they’re completing tasks, so they work in a wider range of settings and applications,” said CEO Wendy Tan White.

“Working in collaboration with teams across Alphabet, and with our partners in real-world manufacturing settings, we’ve been testing software that uses techniques like automated perception, deep learning, reinforcement learning, motion planning, simulation, and force control.”

Tan White – a British entrepreneur and investor who was made an MBE by the Queen in 2016 for her services to the tech industry – will leave her role as vice president of X, Alphabet’s moonshot R&D lab, to concentrate on Intrinsic.

She earlier co-founded and was CEO of website-building biz Moonfruit, and helped multiple early-stage companies get up and running as a general partner at Entrepreneur First, a tech accelerator. She is also a board trustee of the UK’s Alan Turing Institute, and member of Blighty’s Digital Economic Council.

“I loved the role I played in creating platforms that inspired the imagination and entrepreneurship of people all over the world, and I’ve recently stepped into a similar opportunity: I’m delighted to share that I’m now leading Intrinsic, a new Alphabet company,” she said.

The new outfit is another venture to emerge from Google-parent Alphabet’s X labs, along with Waymo, the self-driving car startup; and Verily, a biotech biz. ®

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Charles River to create 90 new jobs at Ballina biologics site

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Charles River is expanding its testing capabilities in Ballina as part of its partnership with Covid-19 vaccine manufacturer AstraZeneca.

Contract research organisation Charles River Laboratories is planning an €8m site expansion in Ballina to facilitate batch release testing for Covid-19 vaccines from AstraZeneca.

The expansion at the Mayo site will create an additional 1,500 sq m of lab space and 90 highly skilled jobs in the area over the next three years.

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The company provides longstanding partners AstraZeneca with outsourced regulated safety and development support on a range of treatments and vaccines, including testing and facilitating the deployment of Vaxzevria for Covid-19 and Fluenz for seasonal infleunza.

The latest investment follows earlier expansions at the Ballina site and Charles River recently announced plans to establish a dedicated laboratory space to handle testing of SARS-CoV-2 and other similar pathogens that cause human disease.

“We are incredibly proud of the transformational changes we have implemented on site and the role that Charles River has played in supporting the safe and timely roll-out of AstraZeneca’s Covid-19 vaccine,” said Liam McHale, site director for Charles River Ballina.

“Throughout the pandemic, our site remained fully operational while keeping our employees safe and having a positive impact on human health. Our expanded facility will provide us with the increased capacity needed to continue the essential services we provide to our clients.”

Charles River acquired the Ballina facility, which focuses on biologics testing, in 2002. The company employs 230 people at its two facilities in Ireland, including the Mayo site and a site in Dublin, established in 2017, which serves as the EMEA and APAC headquarters for the company’s microbial solutions division.

IDA Ireland is supporting the expansion. Mary Buckley, executive director of the agency, said Charles River is an “employer of long standing” in Co Mayo.

“The enhancement of its product lines and the development of additional capability at the Ballina facility is most welcome,” she added. “Today’s announcement is strongly aligned to IDA Ireland’s regional pillar and its continued commitment to winning jobs and investment in regional locations.”

Dan Wygal, country president for AstraZeneca Ireland, added: “Our Covid-19 vaccine, Vaxzevria, undergoes extremely robust safety and quality testing prior to becoming available for patients. We are committed to bringing safe, effective vaccines to Ireland and other markets as quickly as possible, and Charles River will continue to be an important partner in this regard.”

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