What You Need To Know About NFTs
Beeple (b. 1981), EVERYDAYS: THE FIRST 5000 DAYS, 2021. Non-fungible token (jpg). 21,069 x 21,069 pixels (319,168,313 bytes). Minted on 16 February 2021.
You may have heard me mention NFTs on our social media channels or read the term in the headlines lately. They got everyone's attention when one sold for a whopping $69.3 million a few weeks ago. If you're not sure what an NFT – or non-fungible token – is or how exactly they work, I can help.
This short guide explains what you need to know about NFTs, including what they are and how they work.
What is an NFT?
An NFT is a collectible digital asset in the form of cryptocurrency. NFT stands for a non-fungible token – a digital token that's a type of cryptocurrency, much like Bitcoin or Ethereum. But unlike a standard coin in the Bitcoin blockchain, an NFT is different and can't be exchanged like-for-like (hence, non-fungible).
Why is an NFT more special than an ordinary crypto coin? The file stores extra information, which elevates it above pure currency and brings it into the realm of something real. The types of NFTs are varied, but they could take the form of digital art. music, or video – anything unique that could be stored digitally and be thought of to hold value. Essentially, they are like any other physical collector's item, but instead of receiving a painting on canvas to hang, you get a JPG file.
How do NFTs work?
NFTs are individual tokens with extra information stored on the Ethereum blockchain. That additional information is vital because it allows them to become art in the form of JPGS, MP3s, GIFs, and more. Because they hold value, they can be bought and sold just like traditional art, and the value is set mainly by the market and the demand.
Where can I buy an NFT?
You can buy NFTs on a variety of platforms. You will need to choose the one that sells the type of NFT you want to buy. But first, you must have a wallet specific to the platform you're buying on and fill that wallet with cryptocurrency. Some NFTs are starting to sell at mainstream marketplaces, such as Beeple's Everydays – The first 5000 days sold at Christie's for $69.3 million. So, I advise you kept an eye on traditional marketplaces to buy them as well.
Also, NFTs at times are released as 'drops.' A drop is a ticketed event for the sale of high-demand items, causing a rush of eager buyers ready to pay top-dollar for when the drop starts.
Traditional artists have observed this remarkable new approach to creating and selling art and are exploring how to break into the cryptocurrency market. Are you ready to make the shift?