A virtual artwork has sold for an eye-watering $69 million (£50 million) at Christie's auction site, but the buyer will not receive a statue, painting, or maybe even a print. Instead, they receive an NFT, which is a one-of-a-kind digital token.
Whereas Bitcoin was heralded as the digital equivalent of money, NFTs are now being lauded as the digital equivalent of collectibles. However, there are also skeptics who believe it is just a bubble that will break.
If this is your first time hearing the acronym “NFTs,” this is the most comprehensive explanation we have for you.
Non-fungible tokens. That’s right. NFT stands for non-fungible tokens. In economic theory, a fungible asset is anything that has easily interchangeable units, such as currency. When it comes to currency, you can exchange a £10 note for two £5 notes and have the same amount of money. This is unlikely if anything is non-fungible, which means it has special properties that prevent it from being exchangeable with something else.
“Non-fungible” basically means that it's one-of-a-kind and can't be replaced by anything else. A bitcoin, for instance, is fungible, meaning you can exchange one for another and get precisely the same stuff. An exclusive trading card, on the other hand, cannot be duplicated. You'd get something totally different if you swapped it for a new card.
NFTs have been getting a lot of attention from new and existing investors lately. But, are they really worth your money? Should you invest more time creating or selling NFTs if you’re a creator? Should you buy more NFTs if you are an investor?
Let’s answer those questions by starting with the benefits you can get from using NFTs.
If you’re an artist, you may be interested in NFTs because they allow you to sell work that would otherwise be difficult to sell. What would you do if you come up with a fantastic digital sticker concept? Is it possible to sell it on the iMessage App Store? There's no way.
Also, NFTs have a feature that you can unlock that will pay you a percentage any time the NFT is sold or transferred, ensuring that if your work becomes extremely successful and its value skyrockets, you can reap some of the benefits.
One of the most obvious advantages of purchasing art is that it allows you to financially help artists you enjoy, and this is also true for NFTs (which are way trendier than, like, Telegram stickers). When you buy an NFT, you normally get some simple use privileges, such as the ability to post the image online or make it your profile photo. There are also the bragging rights of owning the art, which is backed up by a blockchain entry.
Whether you’re a buyer or an artist, you can earn money from NFTs.
In principle, anybody can tokenize their work and market it as an NFT, but recent reports of multi-million-dollar transactions have piqued interest. Imagine earning millions with NFTs. Who wouldn’t want that?
An animated Gif of Nyan Cat, a 2011 meme of a flying pop-tart cat, sold for more than $500,000 on February 19th. Grimes sold some of her digital art for more than $6 million a few weeks later. Art isn't the only thing that is tokenized and marketed. With bids reaching $2.5 million, Twitter creator Jack Dorsey has sponsored an NFT of the first-ever tweet. Christie's selling of a digital artist Beeple's NFT for $69 million (£50 million) set a new high for digital art.
If anyone can earn a million-dollar by selling NFTs, we can say that NFTs are definitely worth the money. Imagine investing some hundred dollars and waiting for your collectible to increase in value. From $100 up to $1,000, from $1,000 to $10,000, it’s definitely possible to earn this much with NFTs. Given that investors are still hyping this portfolio, it’s fine if you ride on it.
NFTs are worth whatever someone is willing to pay for them, much as almost every other thing people collect or want. Paris Hilton, for example, recently developed a digital image of a cat and sold it for 40 Ethereum on the Ethereum-based auction site Cryptograph, which was valued around $17,000 at the time (and is now worth more than $68,000).
If you're a big fan of Paris Hilton, paying that much for a digital cat photo she created may seem like a bargain. Just not so much for the remainder of the universe. After all, what else would you do with a one-of-a-kind cat photo except save it on your screen and hope that a bigger fool can pay more for it later?
However, some NFTs seem to be more useful than others.
NFTs are attracting the attention of both designers and collectors. Artists, musicians, authors, and other creators may sell their work with a unique digital signature embedded in it, which verifies the authenticity of the work and enhances its value for buyers.
NFTs have the potential to play a significant role in the future of publishing, music, and art. A literary audience might be interested in a digital-first edition of a new book by a well-known author, for example. The publisher could print additional editions, but individual NFTs would only recognize the first 10,000 copies as a first edition. And, since the market for NFTs is continuously booming, investing in them is worth trying.