What Are NFTs: Non-Fungible Tokens
June 17, 2021
Here are three answers to the biggest NFT questions to help you navigate this new medium:
1. What are NFTs
2. How do NFTs work?
3. What are they used for?
1. What are NFTs
The word NFT stands for non-fungible tokens. This means that it is unique and can not be replaced with something else. For example, a bitcoin is fungible because you can trade one for another and you will have exactly the same thing. An NFT is similar to a trading card if you traded it, you’d have a completely different card. Non-fungible tokens (NFTs) seem to have exploded in popularity this year. From art and music to tacos and toilet paper, these digital assets are selling like 17th-century exotic Dutch tulips, including some selling for literally millions of dollars. Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. A staggering $174 million has been spent on NFTs since November 2017.
Some experts state they are a bubble poised to rapidly pop but are NFTs worth the money? Like the dot-com craze, Pokemon cards or Beanie Babies some believe it won’t continue mainstream attention for long, whilst others believe NFTs are here to stay, and that they will change investing forever.
2. How do NFTs work?
Essentially, NFTs are like physical collector’s items, only digital. So instead of getting an actual oil painting to hang on the wall, the buyer gets a digital file instead. They also get exclusive ownership right. That’s right: NFTs can have only one owner at a time.
Specifically, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.
An NFT is created from a variety of digital objects that include both tangible and intangible items, including:
• Art
• GIFs
• Videos and sports highlights
• Collectibles
• Virtual avatars and video game skins
• Designer sneakers
• Music
It doesn’t stop there, Jack Dorsey even sold his first-ever tweet on Twitter which says, “just setting up my twttr,” (Which was first posted by Dorsey on March 21, 2006.) as an NFT for over $2.9 million.
3. What are they used for?
NFTs give artists and content creators a unique opportunity to monetise their work. 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 lets them keep more of the profits.
Artists aren’t the only ones taking the opportunity of this trending movement surrounding NFTs with big brands like Taco Bell and Charmin bringing to auction themed NFTs for charity and fundraising. Charmin has auctioned NFTP (Non-fungible toilet paper.) With Taco bell’s contributions selling out in minutes and the highest buds coming in at 1.5 Ether (WETH) which is worth around £3,723 at the point of writing.
Other examples of purchased items are NBA Top Shot generating over $500M in sales by March 2021, with a single LeBron James NFT highlight going for over $200k. The 2011 era GIF Nyan Cat, with its pop-tart bod. The cat sold for around $600k in Feb 2021.