NFTs are going viral! Back in 2017, CryptoKitties launched as a digital trading game where you can breed your own unique cats on the cryptocurrency platform Ethereum and was one of the first NFTs. Fast forward to 2021, an NFT of a collage of 5,000 photos by artist Beeple sold for $69 million!
The popularity of cryptocurrencies has spiked as more blockchain uses have become available, and NFTs are an exciting new way for digital artists to monetize their content. So let’s take a look at what an NFT is, how it works, and what this means beyond the world of cryptocurrency.
What Does NFT Mean?
NFT is an acronym for Non-fungible Token. First of all, what does it mean to be non-fungible?
Most cryptocurrencies are fungible, meaning you can exchange one with another identical one with the same value. It’s very similar to physical currency systems. A one-dollar bill in the United States has the same value as every other one-dollar bill.
Being non-fungible means that each piece is unique and has its own value, meaning that no two NFTs are the same and you can’t trade it for another of the same. Think of it like sports trading cards or Pokemon cards. An NFT might be one-of-a-kind, or it might be like a trading card where a limited number were produced. However, NFTs are still linked to the blockchain, just like other cryptocurrencies, so there is a record of the purchase.
What Is an NFT?
Now that we understand what non-fungible means, let’s talk about the token part. A Non-fungible Token points to a unique piece of digital content, and when you buy one, the NFT acts as a certificate of authenticity for that content. This includes videos, GIFs, tweets, art, photographs, video games, virtual real estate, and more. Some popular pieces of content that have become NFTs are the Nyan Cat GIF that sold for about $590,000, a photo from Muhammad Ali’s “Fight of the Century”, and Jack Dorsey’s (the CEO of Twitter’s) first tweet with bids as high as $2.5 million.
But people copy art online all the time, and someone can post the Nyan Cat GIF without buying the NFT, so what’s the point? It gets a bit tricky here, but the difference is that while the artist may keep copyright and reproduction rights, you have a token that certifies your purchase of the NFT. For example, you can get your hands on a copy of Picasso’s “The Old Guitarist,” but having a token for it has a much higher value than the copy.
What Do NFTs Mean to the Art World?
If you’re an artist, this is a new way for you to get your art out into the (digital) world and potentially make a profit — but we’ll have more on that later. If you’re a buyer, an NFT is another way to support the artists you like or start a new collection. Some popular NFTs have sold for a shocking amount of money, but there’s limited research on everyday artists and how much you can expect to spend.
Now that you know what an NFT is, are you wondering how to get started? Stay tuned for our next article, where we discuss how to make and sell your own NFTs. In the meantime, check out Bankrate’s quick NFT guide that provides readers with information on NFTs, how to buy them, and the risks to keep in mind.