NFT’s seem to have taken the internet by storm. You’ve probably heard about them through friends or the internet, and know that they have some sort of digital value. But what does that mean? What exactly are NFTs and how do they work?
NFT stands for “non-fungible token”. Non-fungible means that goods and assets cannot be exchanged for one another; they are not interchangeable. Compare this to cryptocurrency. You can trade 1 bitcoin, or fraction of a bitcoin, for different bitcoin, as they are equal in value. NFTs are different. They are unique and non-interchangeable. No one NFT is equal to another.
When you buy an NFT you own all rights to the item. Ownership is proven by built-in authentication. Yes, you can download and copy a digital file of an NFT, but it’s similar to having a print of an original piece of artwork. Only one person holds the rights to the original. Therefore, NFTs can only have one owner, making them one of a kind.
What qualifies a NFT?
Pretty much any data stream can be converted to NFT form. You may have seen that Jack Dorsey, CEO of Twitter, sold his first tweet as an NFT for over $2.9 million. A video of a Lebron James’ slam dunk sold for $200 000. These are just a few examples of NFTs. Real-life pieces of music, art, GIFS, collectibles, music, memes, video game items, memorable sports moments, domain names, videos, and more are also examples.
How are NFTs traded?
NFTs exist on a blockchain, which is a digital ledger that records and facilitates transactions. They can be purchased on NFT Marketplaces, similar to online stores, though selling and trading blockchain-based products.
Should You Invest?
NFTs are very new and their future value is uncertain. We are not financial advisors and are not offering investment advice. No matter how interesting the idea, please do not follow any financial advice offered by blogs or social media, without careful research and consideration.