An NFT, or non-fungible token, is a code that says you own a unique digital item.
An NFT is a type of digital collectible. They first hit the market around 2015, but their popularity has recently exploded.
To understand NFTs, it’s important to first know the difference between fungible and non-fungible things:
Fungible: You can easily count and interchange it. For example, you can trade two $5 bills for one $10 bill and end up with the same amount of money.
Non-fungible: Completely unique and isn’t interchangeable. Anyone can download and frame a picture of the Mona Lisa, but there’s only one original painting.
The unique nature of an NFT—and the scarcity that comes with it—is part of what makes them so popular (and expensive).
Buyers like NFTs in part because it’s an investment option. In the future, if the price of an item goes up, the buyer can sell it and make a profit. Of course, like any investment, NFTs are only worth what someone is willing to pay and no one can guarantee the future value.
Creators like NFTs because it gives them a direct market for selling their work (rather than having to go through a middleman). Plus, they gain greater control over their works and can even make royalties every time someone buys or sells their NFT.
Buying an NFT is a lot like getting something off eBay (except at the end of the day you usually won’t get anything physical in the mail).
Get some cryptocurrency
(most NFTs are priced in ether, the cryptocurrency of the Ethereum blockchain)
Visit an NFT marketplace
(e.g., Rarible, Mintable, OpenSea, NBA Top Shot)
Bid or buy the item right away
(depending on how it’s offered)
Pay for the item with cryptocurrency
What you’ll end up paying includes both the item cost and any fees. These can include a set percent of closing costs or cover the energy required to actually process the blockchain transaction.
Pretty much anyone can put something up for sale on an NFT site. Here’s how it works:
Although NFTs are the hot thing right now, just because you list something doesn’t mean anyone will buy it. People tend to be looking for really rare collectible items offered by celebrities or big reputable companies. Remember, bragging rights are a pretty important part of NFTs.
Many experts believe that in the future we could use NFTs for almost anything, from event tickets to passports. That’s because it’s really easy to verify ownership on the blockchain and really hard to forge or change the owner (without their permission).
An NFT is a code listed on a blockchain that says you’re the owner of a unique digital item. The most common NFTs are works of art, albums, trading cards, and avatar accessories. People purchase them not just to brag about something cool and one of a kind but also in hopes the NFT will increase in value and net the owner some money. Anyone can upload and sell an NFT, but that doesn’t mean there are buyers out there. Plus, an NFT is only worth as much as someone is willing to pay. In the future, experts think NFTs could have many practical uses in our day-to-day lives.