It’s safe to say that the world of digital assets is evolving right before our eyes. Recently, NFTs have become extremely popular amongst crypto investors. We have been hearing about NFTs being sold for millions of dollars, but what are NFTs? Are teenagers really making millions from JPEGs or is there something more to it?
What are NFTs?
NFT stands for Non-Fungible Token. As complex as that sounds, the concept is quite easy to understand. Non-fungible means that something is unique and one-of-a-kind. So, an NFT is a unique, digital token. So far so good?
NFTs are part of a blockchain, most commonly the Ethereum blockchain, which makes them similar to cryptocurrencies in some ways. However, unlike cryptocurrencies, NFTs are unique and also store some extra information.
Anything digital can be made into an NFT on the blockchain; however, the most common form of NFTs is digital art. Images, audio and video files can also be sold as NFTs. Once a digital asset has been made into an NFT, it will be unique on the blockchain and can be traded in exchange for money, just like physical art would be.
Can’t someone just screenshot my NFT?
While, in theory, someone could make a copy of your NFT on their device by screenshotting or saving it to their computers, their version would simply be counterfeit. Since you would be the only owner of the NFT on the blockchain, any other digital copies of your NFT would be counterfeits, hence worthless.
Why should I create an NFT?
If you are a digital artist, you can showcase your art through NFTs and potentially sell them to those who are interested. Previously, it was nearly impossible to trace the true owner of digital art. Now, times have changed. If you are a graphic designer, you can sell your work like any other art piece.
If you have a large audience, you could also create NFTs as a means for financial support from your fans. Many celebrities have already launched their own NFTs that have been highly demanded by their following!
Why should I buy an NFT?
Firstly, you could support artists that you believe in by purchasing their NFTs. It could be a way of giving back to those who are working hard to create something that interests you. In addition, NFTs, just like any other speculative asset, hold value that could appreciate over time. If you sell an NFT for a higher price than when you purchased it, the profit is yours.
It goes without saying that by purchasing an NFT, you also get bragging rights for owning a digital asset on a blockchain.
Are NFTs here to stay?
While this question is hard to answer with certainty as we are in the early stages of NFTs, I believe NFTs have great potential to grow. NFTs provide a method to trace the true ownership of digital assets which enables artists and buyers to engage in the exchange of such assets, just as they would with physical ones.
NFTs have taken the world by storm recently. A piece constructed by the digital artist, Mike Winkelmann, broke the record for the most expensive NFT sold at $69.3 million. CryptoPunks are another series of NFTs which are being sold for millions of dollars.
Many celebrities, including Snoop Dogg and Ellen DeGeneres, have jumped on the NFT train as well. Large companies, such as Visa, have also invested in NFTs. In fact, Visa bought a CryptoPunk NFT for $150,000. Therefore, NFTs are supported by some of the biggest companies and most influential people on the planet.
Every day, more things become digital. NFTs could be the beginning of yet another transition towards a more digital world.
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This article was first posted at: https://medium.com/@arianadeli/understand-nfts-in-5-minutes-or-less-d19e2ca15edc
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