Wondering “what on earth is an NFT?” If you stumbled across this page, that is probably just what you are trying to figure out. You’ve come to the right place. Let me tell you, earlier this year I was in the exact same situation. I heard the term used by someone talking about trading NFTs and I thought “what the heck is that???”
I’ve taken a deep dive learning about NFTs, though both research and first hand experience as my husband has started trading them, so let me break this down for you.
What does NFT really mean?
NFT means “Non-Fungible Token”
I know, so helpful, right. It makes total sense now.
Non-Fungible basically means that something is unique and not interchangeable.
Contrasting this, is something like a stock or cryptocurrency. One share of stock is interchangeable with another; one Bitcoin is interchangeable with another. They can be traded on exchanges since each unit is alike. On the other hand, something non-fungible is one of a kind. We all are familiar with non-fungible items. They may just not be digital – custom designer dresses, diamonds, a Van Gough painting, the list goes on. Now, the only difference with an NFT, it that is stored in a digital ledger called a blockchain. Think of all types of unique digital items – art, videos, music etc. These can all be uploaded to a blockchain network and made into NFTs.
I know this still sounds a little obscure, like why does it really matter? Why would you buy an NFT rather than just buy a digital item through a typical sales channel or buy tangible artwork? This is exactly what I thought. Until I heard that digital artist Beeple sold an NFT for 69 million dollars… In case you didn’t catch that,
Someone bought a JPEG for 69 million dollars.
This isn’t the only NFT that has been sold for a hefty sum.
I have to admit, when I first learned of the incredible prices people were paying for NFTs I actually laughed out loud. I could not wrap my head around the fact that someone would pay money for something they could screenshot. This sounds like some type of dystopian world.
You are probably thinking the same thing. Why would someone buy a digital art piece? Why not just screenshot an image you like? The thing is, that since these art pieces are listed on the crypto blockchain, these items carry a unique digital authentication. Consider some of the world’s most well know paintings, created over the ages. Of course people could make forgeries, but what really draws in serious art collectors, is the fact that they may hold an original painting from a renowned artist. An NFT purchased maintains resale value, while the screenshot sitting in someone’s photo album does not.
The blockchain protects the integrity of the NFT posted on it by authenticating each one through its creation.
Over the course of 2021, NFTs have been more widely adopted as celebrities have joined the ranks of holders, Collin’s Dictionary named NFT word of the year, and they took over Art Basel 2021.
There has been a lot of speculation recently on the longevity of NFTs, and if they are here to stay or just the trending topic of the moment. While some NFTs that lack utility or artistic vision are likely to fade from the spotlight over the next couple of years, projects with underlying utility (such as compatibility with gaming, potential to be used as an avatar, or incorporating a financial aspect) will be around indefinitely. Additionally, pieces created purely for artistic expression will continue to hold their value as there will be art collectors who buy NFTs purely for the beauty, creativity and aesthetic with no intent to make a quick profit.
The real reason that so many eyes are on NFTs are because of the underlying technology. Going forward this technology will be able to be used in a variety of ways from gaming, to authentication of real world items. As this happens, projects that were just riding the popularity wave are likely to lose value while projects created with true utility are going to continue to shine.
NFTs are here to stay.
I really think this is just the start for this technology especially with the way everything is going digital nowadays. Maybe you are a creator. Many artists and creators are releasing their products as NFTs and getting ahead of the game. Maybe you are an investor. People are leaving their 9-5 jobs to trade NFTs due to the profits that are being made. No matter your field, understanding NFTs will benefit you going forward.
I hope this post helped you dip your toes into making sense of NFTs. Stay tuned for future posts I will be making about how to create your own NFTs and how you can buy them!
XX Olivia
The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
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