Non-fungible tokens, or NFTs, have become an investment phenomenon overnight, with $ 60 million in sales on Tuesday—Exceeding the total sales of the whole 2020. An NFT is a type of crypto token used to make digital media unique and therefore collectible, be it a GIF or even a sports highlight. If you’re wondering why everyone has suddenly forgotten how to take a simple screenshot, or are puzzled by this, you are not alone.
What are NFTs?
Using blockchain technology, NFTs designate an official copy of digital media, which can then be sold by artists, musicians, or sports entities to earn money from content that would otherwise be cheap or free. NFTs differ from cryptocurrencies because they are not interchangeable: each one is unique.
If you buy an NFT through a crypto asset market, it is yours to store in your digital wallet or put up for sale on the market. When sold, all computers on a decentralized network record the transaction in a shared ledger, which, in effect, is a certification of authenticity that cannot be altered or erased.
NFTs have a wide range of uses, including collectibles. sports cards, digital art and virtual real estate. According to Yahoo, brands like Nike, Louis Vuitton, and the NBA have already started generating NFT-based assets, with the NBA launching a dedicated collection site called Best shot in the NBA. Last week, artist Chris Torres sold a unique version of Nyan cat, a popular meme of a flying cat with a Pop-Tart body that leaves a rainbow trail, for the equivalent of roughly $ 580,000, according to the New York Times. Rick and mortyJustin Roiland has also jumped to the NFT.
Why would anyone spend money on this?
It may seem strange to buy the “authentic” version of something that you can easily capture on your desktop screen, but the emotional value of collecting is easy to overlook, especially when it comes to original art. Part of the appeal is owning an authentic item created by an artist you love and the bragging rights that go along with it. Essentially, this is not much different than having an original Andy Warhol painting that can be displayed, sold or shared, it is simply digital. Furthermore, crypto art finally unlocks the problem of artists getting paid, as creators can program these assets to pay them royalties each time the collectible is sold.
Also, and possibly more important (if we are explaining the renewed interest in NFOOTs, which have been around for years): people are increasingly seeing these digital assets as speculative investments as they can be bought and sold on online marketplaces (an NBA Top Shot digital trading card of basketball star LeBron James recently sold for $ 100,000, for example).
The rise in recreational investing during the pandemic is likely a factor as well – most of these exchanges accept cryptocurrencies, of course, meeting the demand from individual investors who have reserves of cryptocurrency and are looking to spend them on something that’s fun and has potential to earn more money later. It remains to be seen if this interest will continue to sustain the half-million-dollar valuations of a flying cat GIF.