NFT stands for non-fungible token, which means that it is unique and cannot be replaced with something else. Currently, there’s an explosion of buyers and sellers in the NFT marketplace, but most people don’t understand what it is.
What is an Example of a Non-Fungible Token (NFT)?
Bitcoin, which also uses blockchain technology, is fungible, since if you trade one bitcoin for another, you have the same thing. A one-of-kind trading card, or some other unique collectible, where others do not exist, is non-fungible.
How NFTs Work
Usually, NFTs are held on the Ethereum blockchain, though other blockchain platforms have implemented their own NFT versions. Information about the NFT is stored on the blockchain. The additional information that the Ethereum blockchain stores about NFTs makes them different than their cryptocurrency (known as ETH).
What NFTs Are Available?
An NFT can be anything that’s digital, such as artwork or music. NFTs have become especially popular for buying and selling digital art. In fact, some are saying that NFTs be the future of fine art collecting, but with digital artwork. And people who have jumped on the NFT bandwagon are paying high prices for digital art. Someone recently forked out $390,000 for a 50-second video with original music from Grimes. And another person purchased a video by Beeple for $6.6 million.
What else can be an NFT? Although it sounds like a joke, Jack Dorsey, the founder of Twitter, recently sold an NFT of his first tweet for $2.9 million.
NFT Copyright and Ownership Issues
With NFT ownership, you own the digital art or music that the NFT represents. This is different than just copying something off the internet without authorization. The artist can still retain the copyright as well as reproduction rights, just as one would with physical artwork that is sold as prints. They can also allow certain usage for the NFT owner.
Why Sell NFTs?
For an artist, an NFT gives them a way to sell their digital creations that there may not otherwise be a market for. With NFTs, the artist can set it up so that you’re paid a percentage each time the NFT changes hands or is sold. This ensures that if their work becomes popular and increases in value, they can benefit from that.
Why Buy NFTs?
Buying an artist’s NFT gives fans a way to support their favorite artists. An NFT usually gives the owner basic usage rights, such as being able to legally post the image online or use it for their profile photo. NFTs are also like other speculative assets, in that the value may go up over time and can be sold for a profit.