In the last year, there has been an eruption of NFTs marketplaces. Adoption by businesses and celebrities made NFTs rise in popularity and become mainstream in the world of digital art. While art might not be of interest to you, what if I told you that a single NFT was sold for $69 million? Enough to wonder what an NFT is?
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What Is An NFT?
An NFT, short for a non-fungible token, is a unique digital asset stored on a blockchain. Non-fungible means it cannot be replaced for something else of that kind. For example, a dollar is fungible – you could trade your $100 for my $100 and you would have exactly the same thing. However, NFTs are created to be unique, like for example, Leonardo da Vinci’s famous art Mona Lisa.
How Does An NFT Work?
The key to NFT’s existence is a blockchain, which is a distributed ledger that records data. Most of NFTs are created on Ethereum’s blockchain, but other blockchains support them as well. Basically, a non-fungible token is stored on a blockchain that confirms its ownership and uniqueness. When another person buys an NFT, its ownership is transferred, written, and stored on that same blockchain.
How Does An NFT Look Like?
Remember that NFT from introduction worth $69 million? It’s called Everydays: The First 5000 Days, made by Beeple.
I’m by no means able to measure the quality of digital art, but seeing the price there is a red alert in my head indicating doubt towards the value it creates or represents. When a single tweet is sold for $2.9 million, the question arises as to what the real value of such art is and whether it is just hype. If the market is being irrational, it’s just a matter of time when will it pop and become worthless. But some analysts say that there is much more to come from NFTs. They enhance the way artists and brands convey their content to their fans as well as make more profit with copyrights being transparently seen on the blockchain.
Why Do People Buy NFTs?
$2.5 billion was spent in the first half of 2021 on NFTs, comparing to $13.7 million in the same period of 2020. NFTs popularity went through the roof and the first reason can be attributed to celebrities that are creating their own NFTs and selling it. By buying an NFT, you gain ownership over a unique token on a blockchain, which can be of your favorite singer. Another reason why people buy NFTs is to support an artist. Like for example when you buy a book, although you can usually find it for free online, if you buy it in physical form the author will most likely get part of the sale price. Like with any other type of art, digital art can become more valuable over time, hence earn you more money if you decide to sell it. However, I would be very careful buying NFTs as an investment because that’s a very young and immature market that can lose value as quickly as it has gained.
Conclusion
NFTs provide new opportunities for artists to create content for collectors. The range of possibilities for NFT applications is still not fully explored so innovations will surely happen in the future. New industries are constantly joining the trend and the amount of money in the NFT market is growing rapidly. It will be interesting to see how the NFT industry develops, and until that time, here is an NFT kitten saying goodbye.
