What do Grimes, LeBron James, Jack Dorsey and Nyan Cat all have in common? They each now have ties to the non-fungible token (NFT) world. This new trend and growth beg the question — what are NFTs, exactly?
The world of digital assets is changing, most prominently with these newer tokens. Each is unique and can hold significant value, especially for people or cultural phenomena that people flock to. NFTs, with so much current hype around them, grew to a $338 million value in 2020. Now, they could become the next biggest digital currency trend.
What Are NFTs?
NFTs are unique digital assets, where each token represents something of value that cannot be replicated or copied. Each NFT has its own dataset, stored in a ledger, where users can see who the original creator is. This information is immutable, meaning that, once an item becomes an NFT, it is one of a kind and has the data to prove it.
Anything can become an NFT but original creations will hold the most value. While an item can technically be physically copied, the copies will not have the original creator’s token and thus, people will see it’s not the original. Think of high-value paintings. People make copies of the Mona Lisa, but nothing will come close to the value of the original.
NFTs are essentially virtual trading cards where no two cards are the same. People can use NFTs to promote their artwork or make money from valuable things they can put up for sale.
It’s important to note that NFTs differ from cryptocurrencies like Bitcoin. You can trade one bitcoin for another of equal value, but you can’t do the same with NFTs. These assets also differ from electronic data interchanges (EDIs). The EDI is the computer-to-computer transfer of data and documents that facilitates a transaction. The NFT is the item being digitally transacted.
Who Is Buying NFTs?
Non-fungible trades are taking off quickly, as many people are now hopping on board to see what all the hype is about. NFTs typically range in price, just as any item will when you purchase them with the U.S. dollar. It comes down to the assigned value from the owner.
However, NFTs can also be a bit more volatile than fiat currencies, like Bitcoin — fluctuating with changing markets and investments. This balance between characteristics makes it an exciting form of trading for many people across the world. The sales have already gone into full swing.
People have purchased Nyan Cat art, personal videos from Grimes and unique trading cards that feature LeBron James. The trading hasn’t stopped here though. People are piling into the industry and spending millions on individual NFTs.
For instance, Twitter CEO Jack Dorsey sold his first tweet — also the first tweet on the entire platform — for $2.9 million at the end of March. This NFT took a bidding approach. Dorsey listed the tweet for sale and the value kept going up higher and higher.
As of right now, artwork from digital artist Beeple takes the cake for the highest NFT sale. From Christie’s auction house, Beeple sold an NFT for a whopping $69 million, a number that you’d see with original physical paintings from famous names.
Why Are NFTs Important?
What makes these digital assets so special? They mimic cryptocurrencies but have the potential to become widely used if the hype continues. This uniqueness primarily comes from their immutability.
Trying to forge or mimic an original creation will ultimately fail as the original has that unique token that everyone can see. Therefore, original content creators and sellers can get the value they want for their NFT. In addition, there is no way to remove or discredit this ownership. The data that comes with the original is permanent and unchangeable.
If you go to buy an NFT, you can then use the immutable data to verify ownership of the item and ensure you’re purchasing the correct one for the correct value.
This transfer of digital assets is especially important in the digital landscape, where blockchain and cryptocurrencies are already on the rise. As bigger companies like Tesla announce that they’ll accept cryptocurrency as a form of payment, it legitimizes newer forms of money.
You can engage with the rest of the world through crypto assets, which opens up new opportunities for making money and obtaining items of value. With NFTs, the new trends could soon become an entire industry.
A Changing Landscape
NFTs are new and exciting. They present a new way to do business or simply purchase things that you’d like to collect. The hype has skyrocketed interest in NFTs. Where it goes from here is up to the public to decide.