Those three unassuming letters ‘NFT’ are popping up everywhere right now.
The art and finance worlds have combined through the lens of cryptocurrency into a weird and interesting collaboration.
You’re probably wondering what the heck an NFT is and whether this form of digital art is worth your time.
I’m going to explain this unusual medium so you will finally understand what it all means.
What does ‘NFT’ stand for?
The letters stand for ‘non-fungible token’.
Fungible means that something is replaceable by another identical item. So a £10 note would be fungible because it can be exchanged for a different £10 note that’s still worth the same amount.
So ‘non-fungible’ just means the opposite.
A non-fungible token is unique and cannot be copied or replaced.
How does an NFT work?
By owning or purchasing an NFT, you are basically the only owner of that asset.
This is where rarity and scarcity come into play and why some NFTs are considered very valuable.
If you control an NFT for an asset, you basically own the title deeds to it. So essentially, they are like digital certificates of ownership.
Why are people spending so much on NFTs?
The theory is that just like regular collectibles, digital collectibles will have their own market and value.
Even though anyone can view a digital asset, owning the NFT means that you can unequivocally prove that it’s yours.
It’s hard to say if the demand will continue as the space develops. Currently there’s a lot of hype and interest because it’s a new area. They also provide a good way for artists to interact directly with supports and fans.
In future, these could be a great way for artists to cut out greedy middlemen (like galleries and music labels) and instead sell work directly to fans. The fact that it’s done using cryptocurrency and blockchain technology makes it extremely secure, reliable, and traceable. So artists can potentially still earn royalties, even if an NFT is sold multiple times.
Are they a good investment?
Some people do have more money than sense. Some people also like to spend money on bizarre things. But at the end of the day it’s personal preference and whatever floats your boat.
Many have really jumped onto the NFT bandwagon and are paying massive amounts for these digital assets. This has sparked fears of bubble territory.
It might be a smart move or a stupid one. These assets could continue to increase in value, just like normal collectibles, and pieces of art but no one knows for sure.
Those who are making crazy big NFT purchases obviously have the money. Others choose to spend astronomical amounts on watches, cars, or Pokemon cards so who are we to judge.
Realistically, it’s impossible to predict how much any investment will be worth in the future. I think right now, people are trying to figure out if NFTs can even be considered an investment or if they’re just the new toys in the world of crypto.
I think that NFTs are a really exciting concept and could be a game changer in a lot of industries. They could potentially revolutionise things like concert tickets and stop touts.
The technology has a lot of potential and although right now it’s focused on digital art, it may develop elsewhere.
Only time will tell if these purchases were ahead of the curve or a pie in the sky move.
It’s an interesting space to keep track of and it’s pretty cool to see cryptocurrency being used in some real-world applications and beginning to shake up industries.