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18 June 2021

NFTs: Is the Internet for Sale?

First it was a piece of digital art, then a rare ‘CryptoPunk’ avatar. Now, world-renowned auction house Sotheby’s is selling ownership rights to the original source code of the World Wide Web through the new phenomenon of ‘non-fungible tokens’, or NFTs.

An NFT is a unique digital token that can be thought of as a certificate of ownership for virtual or physical assets. For example, a piece of digital art designed by artist Beeple has been shared countless times online, However the rights of ownership to the piece recently sold at Christie’s auction house for US$69m (£50m), and the winning bidder now retains copyright ownership of the work.

In a similar fashion to cryptocurrencies, a record of who owns what is stored on the blockchain, a digital ledger which is used to securely store information. When a transaction is made it is added as the latest block in the chain and is stored in multiple copies on a series of computers. What makes the blockchain secure is two things: that each block is given a unique cryptographic fingerprint, and the “consensus protocol”, the process by which the computer network agrees on the history of each transaction.

Beeple’s US$69m artwork, titled “Everydays: The First 5,000 Days” is the most expensive NFT yet with bidding reaching US$1m within minutes, but with the sale of NFTs growing in popularity, this record could soon be broken.

Now, Sotheby’s has been chosen to auction the original source code used to create the modern internet. Created in 1989, Sir Tim Berners-Lee proposed a way of linking together pieces of information stored on the early internet through hyperlinks, before building the first web browser and server, with the first webpage describing the idea as “aiming to give universal access to a large universe of documents.”

Berners-Lee’s decision to auction the internet source code has raised eyebrows as he as famously refused to patent his invention in the past, with his employer at the time, the research organisation Cern, relinquished all rights to the technology and put it in the open domain in 1993. Money raised from the auction will be put towards causes chosen by Sir Tim and his wife, Sotheby’s said.

The code is being auctioned as one of four different items packaged as a single NFT. This includes the original time-stamped files of the source code, an animated visualisation of the code, a letter by Berners-Lee on the development process, and a digital poster of the code.

While NFTs, in a similar way to some cryptocurrencies, have been criticised for their environmental impact, it appears that their popularity is growing. Running from 20-30th June and with an opening bid of US$1,000, this particularly auction could draw considerable attention.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
NFTs: Is the Internet for Sale?
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