Non-Fungible Tokens, better known as NFTs, have seen a huge surge in popularity this year. From art and music to everyday objects, these digital assets are selling for millions of dollars.
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An NFT is a digital asset, representing real-world objects such as art, music, objects, and videos. They are bought and sold online ,often with cryptocurrency, and are generally encoded with the same underlying software as many cryptocurrencies.
Although they have been around since 2014, NFTs have gained particular notoriety recently as they have become an increasingly popular way to buy and sell digital artwork. As of November 2017, $174 million was spent on NFTs.
NFTs are usually unique or at least very limited in number and have unique identification codes.
This is in stark contrast to most digital creations, which are almost always infinite in supply. Hypothetically, cutting supply will increase the value of a given asset, provided there is demand for it.
But many NFTs, at least in these early days, were digital creations that already exist in some form, like virtual video clips from NBA games or titling versions of digital art that are already circulating on Instagram.
For example, renowned digital artist Mike Winklemann, known as “Beeple,” created a composite of 5,000 daily drawings to create perhaps the most famous NFT of the time, “EVERYDAYS: The First 5000 Days,” which sold at Christie’s for a record $69.3 million.
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Anyone can view the individual images – or even the entire collage of images – online for free. So why are people willing to spend millions on something they could easily screenshot or download?
Because an NFT allows the buyer to own the original product. It contains built-in authentication, which serves as proof of ownership. Collectors value these “digital rights” almost more than the item itself.
NFTs are built with the same kind of programming as cryptocurrencies.
However, they differ in that each has a digital signature that makes it impossible to exchange one NFT for another, since they do not have the same value, as, for example, two bitcoins have.
Blockchain technology and NFTs provide artists and content creators with a unique opportunity to monetize their products.
For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT, which also allows them to keep more of the profits.
See also: People are paying huge sums to buy collectible cryptocurrencies (NFTs)
If you want to buy NFTs, there are a few requirements. First, you’ll need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, such as Ether, depending on what currencies the NFT provider accepts. You can buy cryptocurrencies using a credit card on platforms like Coinbase, Kraken, eToro, and even PayPal and Robinhood.
Some of the most popular NFT marketplaces are OpenSea.io, Rarible , and Foundation. At the moment, buying NFTs seems like a good investment. However, you should remember that this is a highly uncertain asset, the value of which is based on how much money someone is willing to pay for it.
