NFTs are the latest craze to come out of the crypto world and they’re currently all the rage. But what exactly are they? Are they worth learning about or should they be avoided?
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What are crypto NFTs?
NFTs are a branch coming out of the cryptocurrency system. You can think of them almost like a spin-off series of the main show.
The letters stand for ‘non-fungible tokens’. Bear with me, I realise that must look like mumbo jumbo.
A non-fungible token just means that it is one of a kind. So every non-fungible token is completely unique and cannot be replicated. These tokens are mainly built and used on the Ethereum blockchain network. Ethereum is a network with its own type of cryptocurrency called Ether (ETH).
How do NFTs work?
They mostly operate as an added layer on top of the Ethereum network. This just makes them a bit easier, cheaper, and faster to transact. A good way to picture them is as digital collectibles.
The reason they have become very popular in such a short amount of time is that they work in a simpler way than other parts of the crypto ecosystem. This means that creating them is relatively easy.
Although these unique tokens may have lots of different uses in the future, their main utilisation right now is within art.
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What is digital art?
Currently, artists are starting to use NFTs to distribute their work. Many are choosing to do this because it is a way for them to sell their art directly to fans or collectors without using middlemen.
Because all NFTs are unique, this creates a sense of rarity, which is why you may have seen some forms of digital art selling for ridiculously high price tags.
However, it’s not quite the same as regular art. Because it’s digital, anyone can access the artwork, duplicate it, and download an identical copy for themselves. Some people are questioning how this art is selling for lots of money when others can view the work for free.
The purpose of an NFT is just to prove that you actually own the original piece. Like a certificate of ownership.
What are the most popular NFTs?
One of the largest and most famous sales was by a digital artist known as Beeple.
His collage titled “Everydays: The First 5000 Days” sold for an eye-watering $69 million at Christie’s – that’s almost £50 million!
It’s jaw-dropping prices like these that have many people fearing the NFT wave is a speculative bubble that’s about to burst.
Realistically, it’s hard to determine whether this is a passing fad or the future of art sales. After all, it’s not unheard of for paintings and other artworks to sell at auction for staggering amounts. Whether owning a digital certificate will stand the test of time remains to be seen.
NFTs are unique digital tokens that you cannot copy or fake. Their current main use is to prove ownership of things like digital art. They provide a potentially interesting solution to building a bridge between artists and supporters.
However, as with any new way of transacting, it will probably be a while before the system is running smoothly.
Only time will tell whether these digital assets and tokens will hold value and become a more regular part of the art and collectibles world.
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