What are these Non-Fungible Tokens (NFTs) people are talking about?

 What are these Non-Fungible Tokens (NFTs) people are talking about?

Non-fungible tokens (NFTs) have exploded unimaginably out of the ether this year. From art and music to tacos and toilet paper, these digital assets are selling like 17th-century exotic Dutch tulips—some for millions of dollars

But are NFTs worth the money—or the hype? Some experts say they’re a bubble poised to pop, like the dot-com craze or Beanie Babies. Others believe NFTs are here to stay, and that they will change investing forever.

What is NFT art?

An NFT is a digital asset that exists completely in the digital space. It represents real-world objects like art, music, in-game items, and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.

However, you can’t touch it, but you can own it. An NFT can be any type of digital file: an artwork, an article, music, or even a meme such as “Disaster Girl”, the original photo of which sold for $500k earlier this year.

Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. A staggering over $175 million has been spent on NFTs since November 2017.

NFTs are also generally known as one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures.

This stands in strong contrast to most digital creations, which are almost always infinite in supply. Hypothetically, limiting or totally cutting off the supply should raise the value of a given asset, assuming it’s in demand.

However many NFTs, at least in these early days, have been digital creations that already exist in some form elsewhere, like iconic video clips from NBA games or securitized versions of digital art that’s already trending around on social media.

For instance, Amrit Pal Singh has earned over $1 million selling 57 nonfungible tokens, or NFTs, of his artwork in about nine months.

Because an NFT allows the buyer to own the original item. Not only that, it contains built-in authentication, which serves as proof of ownership. Collectors value those “digital bragging rights” almost more than the item itself.

How Is an NFT Different from Cryptocurrency?

NFT stands for non-fungible token. It’s digitally constructed using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but that’s where the similarity ends.

Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. Unlike NFT, they’re also equal in value—$100 is always worth another $100, one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.

NFTs are totally different. Each has a digital signature that makes it unique and impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible). One NBA Top Shot clip, for example, is not equal to every day simply because they’re both NFTs. (One NBA Top Shot clip isn’t even necessarily equal to another NBA Top Shot clip, for that matter.)

How Does an NFT Work?

NFTs exist and work on a blockchain, which is a distributed public ledger that records transactions. You’re probably most familiar with blockchain as the underlying process that makes cryptocurrencies possible.

However, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.

An NFT is created  from digital objects that represent both tangible and intangible items, including:

•  Collectibles

•  GIFs

•  Videos and sports highlights

•  Arts

•  Virtual avatars and video game skins

•  Danced video

•  Music

Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT for more than $2.9 million. Can you beat that!

NFTs are like physical collector’s items, only digital. Changing the old traditional way of getting an actual oil painting to hang on the wall, the buyer gets a digital file instead.

They also get full ownership rights. That’s right: NFTs can have only one owner at a time. NFTs’ unique data makes it easy and safe to verify their ownership and transfer tokens between owners. The creator can also store specific information inside them. For instance, artists can sign their artwork by including their signature in an NFT’s metadata.

What Are NFTs Used For?

Blockchain technology and NFTs afford artists and content creators a unique opportunity to monetize their wares and eliminate the middlemen. For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT through the help of blockchain technology, which also lets them keep more of the profits of their sweat.

 Additionally, it helps

artists to program in royalties so they’ll receive a percentage of sales whenever their art is sold to a new owner. This is an attractive and residual feature as artists generally do not receive future proceeds after their art is first sold.

How to Buy NFTs

All you need is to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, like Ether, depending on what currencies your NFT provider accepts. You also need to pay a gas fee as a starter. You can buy crypto using a credit card on platforms like Coinbase, Kraken, eToro, and even PayPal and Robinhood now. You’ll then be able to move it from the exchange to your wallet of choice.