A poster advertising Insane Monkeys NFTs with QR code in Miami, Florida. (Photo: Jeff Greenberg via Getty Images)
Chancellor Rishi Sunakhas asked the Royal Mint to create a non-fungible token (NFT) which is to be issued by the summer, the Treasury said on Monday.
Critics immediately seized on the move towards a UK state-backed NFT as an example of the government being “out of touch” as the cost of living crisis puts the squeeze on households.
So what is an NFT, and why are they so controversial?
What is an NFT?
NFT stands for non-fungible token.
Things that are fungible can be swapped for an asset of the exact same type and value – traditional currencies such as the pound work like this.
When something is non-fungible, it cannot be changed this way because it is unique. Think of it like a famous painting – there will only be one original, no matter how many copies are made.
An NFT is a distinct cryptographic token that cannot be replicated, which acts as a certificate of ownership for virtual items.
What is the point?
Supporters view NFTs as the next phase in art collection, and they have exploded in popularity in recent years – with NFT artworks selling for millions of dollars.
Physical works of art and other rare memorabilia have long been sold for large sums of money but if you create something digitally it is hard to make gains.
So NFT offers a chance for artists in the internet age to make some money by selling ownership to anyone who wants it.
Selling a digital asset does not mean the original creator loses copyright either, unless it is explicitly stated as part of the sale.
Of course, this does not stop the image being easily copied by anyone online, but an NFT provides someone the honour of knowing they “own” the original image.
An NFT exists on a blockchain – a record of transactions kept on networked computers that serves as a public…
