NFTs Are Moving In Close!
NFTs or Non-fungible tokens have blasted over this year. From art and music to food and more, these digital assets are selling like crazy—some are even going for whopping millions of dollars. But the question remains, are NFTs worth the money or hype?
Some experts say that they are just here for a while like the dotcom fad. Others think NFTs are here to stay for a while, thus, changing the investing route.
What Is an NFT?
An NFT is a digital asset that depicts real-world objects like art, music, in-game items, and videos. These assets are traded online, usually with cryptocurrency, and they are usually encoded with similar underlying software as many cryptos.
NFTs are not something new. They have been around since 2014, but are only recently gaining the fame they deserve. They have become an increasingly common way to buy and sell digital artwork.
NFTs are generally different and one of a kind with unique identifying codes. According to Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures, “NFTs create digital scarcity.” This holds a severe distinction to most digital productions, which are nearly limitless in supply.
You may ask, why are people prepared to pay millions on something they could simply screenshot or download?
The answer is simple, this is simply because an NFT enables the buyer to own the original item. It also includes built-in authentication, which serves as proof of ownership. Collectors admire those bragging rights, sometimes more than the item itself.
How Does an NFT Work?
NFTs exist on a blockchain, which is a shared through public ledger that records transactions. Most individuals in this field are more familiar with blockchain as the process that makes cryptocurrencies possible.
NFTs are sustained on the Ethereum blockchain, but other blockchains support them too.
An NFT is produced or minted from digital objects that serve as both tangible and intangible items, including:
- Videos and sports highlights
- Virtual avatars and video game skins
- Designer sneakers
- And even tweets count.
Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT for more than $2.9 million—talk about unique!
Basically, NFTs are like physical collector’s items, but their digital version. So rather than buying an actual oil painting to hang on the wall, the collector would acquire its digital file instead. This also provides the now new owner, exclusive ownership rights.
NFTs can have only one owner at a time making them even more unique and desired.