NFTs, non-fungible tokens, are art pieces that are often part of the Etherium Blockchain. In essence, it’s a digital object with a traceable history. A digital trading card. It is like an item that’s valuable, because it was once owned by a celebrity. Today, NFT trading is worth well over $250 million.
Credit: Alyssa Powell/Insider
Non-fungible, in context, means each NFT is completely unique. Trade bitcoin for bitcoin, and you have the exact same thing. Trade NFTs, however, and you’re trading a one-of-a-kind card for another. This trades record is what they trace on a blockchain. Blockchains are a type of data storage. It’s made as a decentralized record. As an example: Instead of a pile of money being stored in one single bank vault, it’s stored in many, spread out across the world. Blockchains are often used online for their safety, decentralized nature and anonymity.
Although associated with artwork, NFTs can come in many different types. Anyone can actually make one. The record of ownership is what defines it. NFTs do not have to be sold either. It could simply stand as this record. Some tokens do not have to be brought with cryptocurrency, some are only traded for up to $10. However, the markets where they are sold often only trade in crypto, creating the infamously high prices.
The beneficent of NFTs are for the artists. In theory, an NFT is the original art-piece. Many can own the copies, but only one person owns the original. A digital artist who would normally share the art for free on a platform like Instagram now has an alternative. They can share the piece, while someone can buy the ownership without making the artwork private.
The Bored Apes
Credit: Bored Ape Yacht Club
In practice, no one actually cares about NFT ownership. A token’s value is completely based on rarity. It rarely has any artistic or economic merit. Celebrities are spending millions on NFTs like the Bored Ape Yacht Club. Because each ape has a minor difference, each ape is technically completely original. This ignores whether there is a demand for the ape in the first place. There’s a massive difference between Michelangelo’s David and a poorly drawn cartoon.
Furthermore, there is a lack of regulation on NFTs. They are prime material for scams and other fallacies. Investors have already lost millions on NFT ‘rug-pulls’ where the product never existed, and scammers leave with the capital money.
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