NFTs have taken the world by storm and are making headlines everywhere from art and music to even tacos and toilet paper. These unique digital assets are being sold for millions of dollars, leaving some experts to question whether NFTs are just a bubble waiting to pop, like the dot-com era or Beanie Babies. But others believe that NFTs are here to stay and that they will change the way we invest forever.
What exactly is an NFT? An NFT is a one-of-a-kind digital asset that can come in the form of art, music, in-game items, videos, and more. They are bought and sold online, often using cryptocurrency and are usually built using the same software as many cryptocurrencies. The NFT market was worth a whopping $41 billion in 2021 and is fast approaching the total value of the global fine art market. NFTs have a unique identifying code, creating digital scarcity, unlike most digital creations that are infinite in supply.
Famous digital artist Mike Winklemann, aka “Beeple,” created one of the most famous NFTs of 2021, “EVERYDAYS: The First 5000 Days,” which sold for a record-breaking $69.3 million at Christie’s. Although anyone can view the artwork online for free, NFTs offer buyers original ownership and built-in authentication as proof of ownership.
But how is an NFT different from cryptocurrency? NFTs are built using the same programming as cryptocurrencies, like Bitcoin and Ethereum, but they are not equal to each other or exchangeable. Cryptocurrency is fungible, meaning it has equal value and can be traded or exchanged, making it a trusted means of conducting blockchain transactions. NFTs, on the other hand, have a unique digital signature and cannot be exchanged for one another.
NFTs exist on a blockchain, usually the Ethereum blockchain, and are “minted” from digital objects representing tangible and intangible items, including graphic art, videos, virtual avatars, designer sneakers, and even tweets! NFTs are like digital collector’s items, offering exclusive ownership rights, and the ability to verify ownership and transfer tokens between owners using blockchain technology.
NFTs offer artists and content creators a new way to monetize their work, allowing them to sell their wares without relying on traditional distribution channels. Whether they are a bubble or here to stay, one thing is for sure: NFTs are shaking up the art world and changing the game for artists and collectors alike.