[Opinion] What Is NFT?

The author has written their first book. It is titled 'NFT Future Class.' Currently, there are many NFT-related books on the market, but most interpret NFTs primarily as investment tools or as mediums for creating future wealth. They focus on sensational topics such as who earned how much, how much NFT-based artworks sold for in the market, or which marketplace is hot.

The market status and investment results cited in these books inevitably become outdated and meaningless knowledge by the time readers engage with them. There was no book that covered the basics and definitions of NFTs, their background, and social context?things people must know before taking an interest in NFTs. Without a foundation, and with related industries like blockchain and metaverse added, learning the implications of NFTs was practically impossible.

As an author with a background in economics, unable to satisfy my intellectual curiosity about NFTs in social and economic contexts, I studied various materials and eventually just wrote a book. In today’s column, I want to share with readers the concepts, definitions, and implications of NFTs that I learned and realized while writing this book.

To define NFT in one sentence: it is a “blockchain-based private digital registry that proves ownership of digital files in the digital world.” The digitization of our lives continues and accelerates. The pandemic caused by COVID-19 has sped up this process even more. However, we still lack the technology and systems to prove ownership of assets in the digital world. In this situation, the emergence of NFTs as a method to register ownership of digital files is welcome.

As life in the digital realm becomes more important, humanity will want to own assets in the digital world. If humans have the desire to own, proof of ownership is also necessary. In the real world, ownership of movable property is proven by possession, and ownership of real estate is proven by registration. Various artworks and content called “assets” in the digital economy can be classified as movable property, but they are generally stored on external servers, and it is technically impossible for the owner to physically possess that data.

Therefore, ownership of files on external servers must be proven in some form, and the most intuitive and natural method we can think of is registration. However, real estate registration in the real world is trustworthy because it is managed by the state, but in the digital world, there is no state-guaranteed registration system yet, so it must ultimately be resolved by the private sector.

When a trustworthy third party (the state) cannot guarantee the system’s reliability, we naturally think of distributed ledgers and blockchain technology. Thus, attempts have been made to issue tokens using blockchain technology and store ownership history of specific digital files in those tokens, and this is what NFTs are.

Whether in 10 or 20 years NFTs will still be used to prove ownership of digital assets, or whether the state will take the lead in proving digital asset ownership, or whether a completely new and more innovative technology will fulfill this role, is unknown. However, I believe NFT technology is playing a pioneering role in proving ownership of digital assets, and these attempts are meaningful for humanity’s advancement into the digital world.

Kihoon Hong, Professor, Department of Business Administration, Hongik University