Explainer: Non-fungible tokens – $50,000 and 3 weeks later

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In January and February, there were around $300m in non-fungible token sales, according to Cointelegraph. But for many, NFTs are bewildering in the least. BizNews founder Alec Hogg makes sense of this digital movement with Invest Africa chairman Rob Hersov and Josh Minsk, COO of Momint. Hersov invested $50,000 into the local NFT-backed social media platform. 

Rob Hersov on what a non-fungible token (NFT) is:

Just to be honest with you, a month ago, I didn’t know what an NFT was. So, if anyone listening to this hasn’t heard of an NFT, don’t feel bad – but make sure you learn what it is so you can tell other people because it’s pretty cool and it’s happening. I got a call from three young guys – one of whom was going to come on the call right now – and he basically said, “we’ve got to talk to you.” By the end of that day, my brain had opened.

By Monday, I had basically wired, on a handshake, $50,000 to these three guys. What they’re doing is groundbreaking. A non-fungible token – and Josh is going to come on and tell me where I’ve got it wrong – is a digital certificate or certification of ownership, provenance, legacy, countenance based on the blockchain. Soo any digital item ownership can be proven, irrevocably, in perpetuity.

Josh Minsk on meeting Rob Hersov:

A couple of my business partners and I were working on software projects in Cape Town and we were growing a business here. We bumped into Rob in the Ideas Cartel building – which is a co-working space that we were in – and just started talking from there. I think when we started working on this idea, Rob was just our go to [guy]. We absolutely knew that if we needed to connect with somebody, Rob would be the guy to help us do it.

[The $50,000] was part of the starting costs, essentially, that we needed to higher up and get everything that we needed, so that we could just plow ahead. I think when you’re working on technology like this, you need to have all of the blockers removed – because there’s enough on the technological side, the business development side and having to jump out of focusing on growing the business and start worrying about funding. Again, that’s something that we wanted to negate early on.

Rob Hersov on the investment he made:

It was the right amount to get the tech development done and to have Josh, Aaron and Adam drop pretty much everything they were working on and focus entirely on this. Three weeks later, they have built they had built the platform – I’ve never seen anything like it.

Josh Minsk on minting NFTs:

Minting NFTs is essentially what you have to do to create one. It’s sending a piece of information onto the blockchain and it goes around to all the different computers connected to that blockchain, they all verify that the information is true and correct. That’s how decentralised blockchain systems work, effectively. Usually, there’s a significant cost involved with doing that. I think that’s where our tech started becoming quite exciting, because the people we were speaking to in the art community and the content community – who are looking to create NFTs – the minting cost that they would have to pay with with ranging dramatically, anywhere from $50 to $250.

Many of the people that we were speaking to were actually losing money every time they were trying to sell NFTs because the cost of minting one and transferring one was so egregious. We developed a piece of technology on our side that can allow you to do that for a cent. We’re able to scale it and give it to the masses dramatically quicker now.

Josh Minsk on what minting entails:

 An example of the first thing that we minted as a business – and it went live on Friday to a closed test group – was a Brian Habana special edition.We did a 3D render of Brian Habana racing a cheetah – one of the iconic moments that he’s known for. We put it up there for auction on the platform. It’s actually still alive right now, there’s a couple of people who bet on it. I think the bid is sitting at about $10,000 at the moment [and] we expect it to go up. But the process of minting something is essentially you create the item in real [or] digital life.

Whether that’s a 3D piece of art, whether it’s video or audio file and then you mint it to the blockchain via a smart contract. So you create a small contract that defines the terms. Then you meant it to the blockchain with those terms. Every time it gets transferred there, the ownership changes or anything that’s contract goes with it and the rules are applied.

Josh Minsk on the other uses of NFTs:

If somebody were to buy a Picasso, they buy it for quite a few reasons. One of the reasons they buy it is because they enjoy it as a piece of art. The other reason they buy it is because it’s a tradable asset that everybody agrees is valuable. The other reason that people buy it for so much money is that it’s an original.

Now, an NFT is the first piece of technology available that allows you to do that with a digital piece – whether that is a piece of art or music. That’s why so many people are willing to pay prices for it, because it’s digital art that they can verify they own as an asset and that is an original. So long as you can prove the paid value of it and the ownership history, you can reach high resale values for it as well.

It’s a decent set store of wealth as well. Where we’re looking to take the technology, longer-term, is we are building a platform that will enable content creators to sell their content directly to that audience. We live in an ad economy, where sponsorships and ads are the way that content creators make money online. What we believe is that this NFT piece of technology that we have can enable creators to effectively create irrefutably owned pieces and sell them to that audience in the form of limited editions and private editions.

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