WTF is an NFT? Kings Of Leon’s weird non-fungible token thing – explained!

The Followills might love cowboys from yesteryear, but they've also one foot in the future, if new album 'When You See Yourself' is anything to go by

It might sound like a peyote campfire party in Death Valley and tell tales of Wild West bandits fleeing the law, but Kings Of Leon’s eighth album ‘When You See Yourself’ has at least one spur in the future. It’s the first major rock album to be released as an NFT, following hard on the heels of Grimes selling $6 million worth of digital artwork in the format earlier this week. But what are NFTs? What do they mean for the future of music (and the environment)? And do you have to plug them directly into your brain to listen to them? Let’s dig in…

Wait, so what are NFTs?

NFT stands for ‘non-fungible token’, which sounds like something you might put in a powdered soup but is actually a form of cryptocurrency asset. Most cryptocurrencies are fungible (or ‘spendable’) tokens; you can exchange them for other cryptocurrencies or spend them on goods where they’re accepted, much like actual money. Non-fungible tokens act more like digital gold bars, rare trading cards or paintings kept in safe storage – they’re kept on the blockchain (basically a Cloud for financial assets, but where everyone with an account keeps a note of what you own) in your name but you can only sell or trade them as collectibles.

In Kings Of Leon’s case, if you snap up one of their $50 NFT albums in the two weeks they’re on sale, you’ll own a token on the blockchain from which you can download the record, exclusive moving artwork and access to limited edition vinyl, but then no more will be made and existing tokens can’t be reproduced. This makes the NFT itself a kind of digital limited edition with its own collectability and value, much like rare vinyl albums – you can sell it to another collector for whatever they’re prepared to pay for it.

What are the benefits of NFT albums?

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For the artists, NFTs bypass streaming and traditional download markets and put the money straight into the bands’ pockets, which is a major draw at a time when large gigs still seem a way off and streaming services pay worse than a week’s work experience at Amazon. For the fan, after years where music has been turned into a virtually worthless, all-but-free commodity, the relative scarcity of NFTs mark a return to the concept of value in owning music, but with a future-facing twist: digital music as investment.

In the days of CDs and vinyl, the value of your music was largely fixed by the asking price and eroded over time; physical music generally devalued when second-hand and even collectible editions rarely saw vast increases in value, particularly if you ever actually played them. Kings Of Leon’s NFT album, however, is based on the Ethereum blockchain – Ethereum is essentially the second-in-command cryptocurrency after Bitcoin, the thrusting young general to BTC’s wheezing old Roman emperor.

As the value of Ethereum, and the wider crypto market, rises and falls (and more potential collectors enter the market), the value of that NFT is expected to fluctuate similarly, making your album something akin to a sonic investment in the future of cryptocurrency.

So ‘When You See Yourself’ could make me GameStop rich?

The grand ambition of every cryptocurrency is to be the one to reach mass adoption first – to replace money. If that happens, the value of that particular currency will certainly skyrocket, likely taking the price tag on your NFT album with it. Bands such as Kings Of Leon releasing NFTs is a step in the direction of mass adoption, and if they become commonplace, then it’s Lamborghinis all round, right?

Hold your horses, Bucko. Bitcoin and Ethereum are first-gen tech: they’re slow and expensive to trade, like the Playstations One and Two of cryptocurrency. If cryptocurrencies really do take over the world, it’s quite possible they’ll simply become storage facilities for value while newer, faster and cheaper-per-transaction tokens become the day-to-day digital money. Tokens such as Cardano, for example, which I only mention here because (full disclosure) I’ve got a bagful and I want you all to make me richer than God.

In the meantime, on the back of Bitcoin’s recent break-out, the crypto market is currently mid-boom, and quite possibly headed for just as sudden a crash. So if you’re in it for the investment alone, you might well find the immediate value of your NFT peaking very soon and losing value rapidly. The best way to approach it is in the same way you would a limited-edition box set for fans, to enjoy the token and its peripherals for itself, fully aware that the value of ‘Time In Disguise’ can go down as well as up.

Will NFTs kill the planet?

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Much attention has been focussing recently on the cost in energy of cryptocurrencies and their associated assets. As we explained, Bitcoin and Ethereum are relatively old technology, which immediately makes them deeply damaging in terms of the energy required to create and trade.

Here’s how it works: new cryptocurrency tokens are generally ‘mined’ by those computers cataloguing each trade. To avoid the average bot becoming the next Jeff Bezos, computers compete against each other to solve mathematical puzzles, with the first to reach the solution being awarded the coin, a process called ‘proof of work’. The currencies also have a maximum possible supply, so as the number of coins remaining to be mined decreases, the difficulty of the puzzles you need to solve to mine them increases.

Grimes
Grimes and Elon Musk. CREDIT: Taylor Hill/Getty Images

And these are puzzles that make Only Connect look like balancing bricks on Gordon Ramsey’s massive Buckaroo. 10 years or so ago, you could mine Bitcoin on little more than a calculator watch; today, there are miners in Russia building warehouse-sized rigs hooked up to hydroelectric dams, such is the computational power required to mine one coin and the electricity needed to keep them going. It’s estimated that buying one of Grimes’ pricier NFT artworks would require someone somewhere to expend many years’ worth of your carbon footprint just to rubber-stamp the trade.

If Ethereum, as reported, currently has a greater annual energy consumption than Argentina, then the proliferation of NFTs on its blockchain will undoubtedly harm the environment, and as more of its coins are mined over time, that consumption will only increase. There is much debate within crypto about this issue.

Some argue that increasing energy consumption is built into the cryptocurrency system as long as a coin’s value and reward is tied to the amount of electricity used to create it. Others predict a near future where those cheaper, more energy efficient and abundant coins replace the gas-guzzling giants like Ethereum and proof of work is replaced by a less damaging alternative on next-gen blockchains.

Will NFT albums be the future of music?

If those energy consumption issues can be addressed, there’s a good chance that the answer’s ‘yes’. Some view NFTs as the next doomed format like the MiniDisc, a pricey development that will never catch on. But NFTs don’t require any expensive new hardware that millions need to take up in order to make them viable and stop them slipping off the evolutionary chart of music distribution. And they can be used, as Kings Of Leon prove with their other NFT packages, to incorporate VIP experiences, gig tickets, artworks and sneaky pre-show pints with the band.

As a means of making music worth something again, they’re extremely attractive to the artist and come with the bonus appeal of aspiration for the fan. And with the exclusivity factor thrown in, they’re a great way to feel as though your music is actually yours.

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