We’ll try to break it down, but be warned, this can be a very, very deep rabbit hole to find yourself in.
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What does NFT stand for?
Non-fungible token.
What does non-fungible token mean?
The second question on everyone’s lips. Non-fungible essentially means unique, it can’t be replicated or replaced.
For example, you can trade one bitcoin for another bitcoin. That’s fungible. But you can’t exchange one unique piece of artwork for another, that’s non-fungible.
What are NFTs?
In its most basic format, an NFT tends to be a digital piece of artwork with a unique identification code and metadata that are linked to the blockchain. Usually these tend to be photos, videos or audio files.
The unique identifier (or a smart contract) that is stored within the blockchain validates when it was purchased and by who, providing official recorded ownership and with it, bragging rights.
What is the Blockchain?
This is a whole other question, but in simple terms it’s a digital ledger. A list of records (blocks) linked together through cryptography.
Why purchase an NFT?
Another great question. It’s digital art collecting in its early stages. At least that’s the hope of the customers who have spent millions upon millions on NFTs already. It’s digital ownership of an asset that either consumers wish to keep or hope the value increases with years to come with a look to resell.
Can’t you just copy a JPEG?
Well… yes. But much like real world, physical art, anyone can find and print a copy of the Mona Lisa, but only one person can hold the original.
What is the point of NFTs?
As an artist and creator, being able to sell artwork online with a way to validate ownership of the original significantly lowers the barrier to entry in the space. Anyone can create and sell an NFT through a vast selection of platforms. Not only do they receive the initial purchase value, but there are features that enable the artist to receive a percentage each time the NFT is sold on in the future.
As a buyer, much like with real world, physical art it enables you to support creators alongside the bragging rights of ownership.
To summarise…
NFTs and the blockchain are all new and emerging technologies. There is plenty of excitement around the possibilities and opportunities it opens up. Along with the expected and not completely unwarranted uncertainty and speculation. It’s an ever-changing digital world and there are no doubts that NFTs are growing in popularity and are a huge part of that future.
If you needed any confirmation on the validity of NFTs, the most expensive one to date titled “The Merge” was sold in December 2021 for a whopping $91.8 million!
The only question that remains is how high is the NFT ceiling?
