NFTs are currently shaking up the worlds of art, tech, and finance. But what exactly are these mysterious tokens? And why should you care? To get you up to speed, here’s a quick explainer on the hottest blockchain technology on the market right now.
What is an NFT?
An NFT is a “non-fungible token,” a digital asset that links ownership to a digital object (like a piece of art, a video, or an in-game item) that can be bought and sold.
How do they work?
NFTs exist on a blockchain, which is a digital ledger of transactions that is distributed across computer networks. NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.
It’s pretty complex, but what’s important to know is that an NFT has some special properties:
- It can have only one owner at a time.
- Each token is “minted” and has a distinctive identifier that is directly linked to a specific blockchain address. This not only makes it easy to verify ownership but also secures the digital asset so no one can steal or manipulate it.
- Once an NFT is purchased, you can sell the token via NFT marketplaces to other buyers for a profit.
NFTs operate like any other sort of collectible or piece of art, but instead of a physical item, it’s a digital file.
How do I buy an NFT?
If you are looking to get into NFTs, you’ll need to invest in cryptocurrency and a digital wallet. Once you have your wallet set up and funded, you are ready to become a digital collector. Yes, it’s that easy! Kind of…The process of purchasing an NFT is similar to any other online auction site: find the item, place a bid, wait and see. Pro tip: The largest and most reputable NFT marketplaces are OpenSea, Rarible, and Nifty Gateway.
Should I buy an NFT?
NFTs are changing the collectibles market, so getting in on the ground floor might prove to be profitable. While some critics argue it is just a fleeting trend, they said the same thing about cryptocurrencies. And now look: unregulated finance is here to stay!
Ultimately, buying an NFT is a personal choice, like any investment. If you have the crypto to burn and you see something you like, go for it. The important thing to understand is that NFTs are still in their infancy, and as the market goes through different cycles, we will just have to bide our time to determine what their real value is.
BONUS: Which artists should I keep an eye out for?
Some of the world’s most famous contemporary artists have gotten into NFTs, like Daniel Arsham, Damien Hirst, and KAWS.
Now, time to get collecting.