It was just announced that earlier this week that famous athletic wear brand Nike will be acquiring NFT startup RTFKT (pronounced artifact). This is one of the biggest acquisitions the NFT space has ever seen, with many seeing it as a step to further legitimizing the NFT space.
What exactly is RTFKT though, and what are the implications of this acquisition?
NFTs Reviewed
Before diving into this specific acquisition, what are NFTs and why are they exploding in popularity?
NFT stands for Non Fungible Token. Something is Fungible if it could be replaced by an identical item for the same value. Think of the US Dollar- a $1 bill will be worth exactly the same as another $1 bill.
NFTs are Non Fungible- meaning that they are individually unique. Think of rare trading cards, but digital.
What makes NFTs unique is that ownership is tied to the Ethereum blockchain. This means that once you buy an NFT, your ownership will forever be verified on the blockchain. The Ethereum blockchain cannot be edited, so no one would be able to claim true ownership of the NFT unless you were to sell it on a marketplace.
Screenshotting NFTs
Yes you can screenshot or right-click, save a piece of NFT art. I don’t own the above NFT that I added to this article, however I can add it to this article. If anyone can screenshot or save an image, why is it valuable to own?
Think of a famous work of art, like the Mona Lisa. The original Mona Lisa is on display at the Lourve in Paris, however there are uncountable copies all over the internet and in print. It is impossible to try and sell these copies claiming they are the original, however, since they aren’t the original.
The same concept applies to NFTs. You can’t sell the screenshot because you do not have ownership of the NFT according to the blockchain. When you sell an NFT, you are not selling a specific piece of art, but the ownership claim to that piece of art.
NFT Uses Outside of Art
While NFTs are a neat new use of Blockchain technology, are expensive trading cards essentially their only use? Far from it.
Music has been one of the most talked about uses of NFTs outside of art pieces. Music NFT Startup sound.xyz just raised over $5MM in Venture Money this week. Essentially, the idea behind sound.xyz is:
Artists putting out music through Sound can offer a limited supply of NFTs to go along with the release. They’re souvenirs, but they also let you leave a comment at a certain moment in a given song. It’s similar to the comment functionality on SoundCloud; when an NFT is traded, a new owner can overwrite the token’s original comment.
Outside of music, brands are starting to hop on board the NFT train, which brings us back to Nike and RTFKT.
Big Brands and Blockchain
Nike is one of the biggest brands in the world, but what is RTFKT?
RTFKT is an NFT company that was known for its CloneX NFTs, a collaboration with Japanese artist Takashi Murakami.
Nike likely did not buy RTFKT for the CloneX drop. They aren’t interested in the “mutant” NFTs that RTFKT dropped and are now selling for millions of dollars. What Nike wants is the NFT brand and expertise to start minting their own NFT, possibly to the tune of hundreds of millions of dollars.
Nike is not the only large brand taking part in the craze- Adidas has a partnership with Bored Ape Yacht Club, and also has bought a plot in the metaverse project “Sandbox”. (More to come on the Metaverse).
Other companies, like Recur, are partnering with large brands to create NFTs in the near future. While still in its infancy, the big brands are hopping on board the NFT train.
What is important about this buy-in is that it shows that NFTs are no longer a niche technology for selling pictures of monkeys. Large companies with substantial risk adverseness are starting to invest because they see massive potential future value in the space.