What is an NFT?
When I answer this question, I take a deep breath and launch into a technical explanation of cryptocurrency, blockchain protocols, and the range of cryptoart assets often attached to these non-fungible tokens. Inevitably, the poor soul who posed the inquiry gets lost in its circuitous lexicon. So is it like bitcoin? What does the token look like? How do you mine for one?
At that juncture, I delve into more details and may even recommend some in-depth articles for the increasingly bewildered listener.
Merriam-Webster is here to help with this excruciating exchange. The 190-year old publishing company announced today that it has added NFTs to its dictionary to “bring clarity” to the oft-misunderstood term. The entry reads:
Non-Fungible Token: a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership (as of a specific digital asset and specific rights relating to it)
Written for advanced adult English speakers who might use Merriam-Webster’s Collegiate dictionary, the definition is succinct but still pretty technical. At first, it made the important distinction of decoupling the term from digital assets—such as art files, sound clips, video footage, or news articles—that NFTs have become almost synonymous with.
In other words, the 21,069 x 21,069 pixel jpeg that Christie’s sold for $69.3 million is not the NFT, under that definition. The NFT is actually the encrypted token ID: 40913 generated by MakersPlace. But a day after its original definition, Merriam-Webster broadened the term to include “the asset that is represented by an NFT.”
Peter Sokolowski, Merriam-Webster’s editor-at-large, likens the task of defining a technical term like NFT to boiling something down to its essence. “It’s like cooking or reducing a sauce,” he says. “You just want the part that makes it distinct from anything else that might be slightly like it, but allowing for this [definition] to encompass anything that it could be at the same time. That is a philosophical challenge, but let me tell you, it’s a welcome one when it’s a narrow definition such as this one.”
Coming up with a pithy definition for NFTs is an easier task than common words like “set” or “run,” which can be used in multiple contexts, explains Sokolowski. “Defining words that have narrow meanings, even if they’re technical and complex like this one, is actually kind of a joy.”
And the most enjoyable word to unpack in the term was “fungible,” he says. From the Latin verb “fungi,” meaning “to perform,” the word entered the English language in the 17th century. Its original usage referred to money, the most fungible or interchangeable asset of all, Sokolowski notes. Later, “fungible” became associated with stocks and traded commodities like oil or corn.
Apart from publishing the definition on its website today, Merriam-Webster announced that it will be auctioning the term’s definition on OpenSea, a popular marketplaces for digital collectibles. Sokolowski says it’s a playful way to showcase the term in action. “We’re making a connection between a newly-entered term and the phenomenon described by that term. It’s rare that such a connection can be so immediate and so precise,” he explains. Proceeds of the auction will benefit Teach for All, a global consortium of 60 educational non-profits.
Charity auctions have assisted our understanding of NFTs, especially the multimillion-dollar transactions in the cryptoart market. Breakthrough artist Beeple, for instance, has been raising millions for an environmental nonprofit seeking to offset the great environmental toll of mining tokens. And Jack Dorsey gave GiveDirectly’s Africa Response fund $2.9 million, the winning bid for his first tweet.
It’s not just an altruistic gesture; donating to charities also gives NFT creators a significant tax break. The US Internal Revenue Service considers cryptocurrency a taxable capital asset, not money per se. This means that if a unit of ether bought for $100 in 2018 jumped in value to $1,700, the holder would be taxed $320, or 20% of $1,600, as CNBC explained.
And for the ego-driven collector, Merriam-Webster is offering a measure of internet fame in its first NFT gambit. The winner of the auction will be cited on the entry for NFT on its website.
Merriam-Webster ‘s editors constantly have an ear out for new terms. When is a word or term considered for inclusion in the dictionary? According to Sokolowski, the “magic moment” comes around the time when major publications cease using parenthetical explanations to explain the term. “That means that they have made the decision that the reader of this article has a reasonable expectation of knowing what this term means,” he says. “That indicates to us that this word is a naturalized citizen of the English language and we have to put it into the dictionary.”
Unlike with new emojis, Merriam-Webster doesn’t have a formal committee who decides on what new words to include each edition. “Every word has its own pace,” Sokolowski explains. For example, the term “Covid-19” entered Merriam-Webster’s dictionary 34 days after the World Health Organization first used the term to describe the deadly respiratory disease because of the urgent clamor for credible information. On the other hand, the word “cryptocurrency,” was only added to the dictionary in 2018, nearly a decade after being used in a seminal paper by Satoshi Nakamoto, the elusive inventor of bitcoin.
Over the last few years, Merriam-Webster has gained a reputation for obliquely commenting on current events by promoting a topical word-of-the-day on its social media accounts. For instance, when United Airlines forcibly removed a passenger from an overbooked flight in 2017 and described him as a “volunteer,” Merriam-Webster promptly tweeted its dictionary definition.
Sokolowski says their choices reflect the top search queries on their online dictionary, which has a regular monthly traffic of about 100 million users. During the time of the United Airlines scandal, the number of people who looked up the word “volunteer” on Merriam-Webster’s site jumped by nearly 2000%. Analyzing what words people are searching for online offers a direct connection to the zeitgeist, Sokolowski says.”That tells us that people were thinking about the news through the prism of language,” he observes. “Language is the vehicle of politics, of ideas, of philosophy, and reflection.”
When asked about the company’s place in contemporary culture, Sokolowski describes its mission in journalistic terms. “Through fake news and alternative facts, I think the dictionary has served as a backstop or as a kind of neutral and objective arbiter of language,” he says, “A dictionary has no political perspective except to tell the truth about words.”
Update: Merriam-Webster subsequently broadened its definition of NFT, and this piece has been amended to reflect the change.