It seems that the non-fungible token market has exploded this year. Some of these digital assets sell for millions of dollars- from art, music, tacos, and toilet paper.Are NFTs worth the hype or the money? Experts say they’re a bubble poised to burst like the dot-com craze or Beanie Babies. Others argue that NFT are here to stay and will forever change investing.
As the hype builds, here’s a look at some of the biggest, most valuable NFTs on the market. (For a guide to other NFTs, check out CoinDesk’s interactive map.) Art and fashion When people think of blockchain, they might not immediately think of art or fashion. But in recent years, blockchain has been used to verify ownership of rare works of art, create digital versions of vintage posters, and allow people to buy and sell items using cryptocurrencies. In February, a painting by artist Andy Warhol called “Double Elvis” was auctioned off for $82 million, the biggest sale of a work of art at auction since the global financial crisis. It was bought using a cryptocurrency called ether. The sale was made possible by Ethereum, a blockchain that lets people create new cryptocurrencies that are based on existing ones.
What Is An NFT?
An NFT is a digital representation of a real-world object, such as art, music, and in-game content. They are typically bought and sold online, frequently with cryptocurrencies, and they are generally encoded with the same software that underpins most cryptos.
Even though they have been around since 2014, NFTs are gaining notoriety now because they have become an increasingly popular way to buy and sell digital artwork. Since November 2017, more than $174 million has been spent on NFTs.
Also, NFTs are generally unique or limited edition products and have unique codes for identifying them. “NFTs create digital scarcity,” says Arry Yu, managing director of Yellow Umbrella Ventures and chair of the Washington Technology Industry Association’s Cascadia Blockchain Council.
The supply of digital creations is almost never limitless, which stands in sharp contrast to most digital creations. In theory, cutting off the supply of an asset should raise its value, assuming the asset is in demand.
What Is the Difference Between NFTs and Cryptocurrencies?
NFTs stand for non-fungible tokens. Like Bitcoin or Ethereum, Cryptocurrencies are generally built using the same kind of programming. That’s where the similarities end.
Currency and cryptocurrencies are both fungible, which means they can be traded or exchanged for each other. They’re also equal in value; one dollar is always worth another dollar, and one bitcoin are always worth another bitcoin. Due to its fungibility, crypto can be trusted to conduct transactions on a blockchain.
NFTs are not fungible. NFTs can’t be exchanged or equaled (therefore, they are non-fungible). For instance, one NBA Top Shot clip isn’t equivalent to every day because they’re both NFTs. (One NBA Top Shot clip isn’t even necessarily equivalent to another NBA Top Shot clip, for that matter.)
NFTs: What Are They Used For?
NFTs and blockchain technology offer content creators and artists a unique opportunity to monetize their products. It is no longer necessary for artists to sell their artwork through galleries or auction houses. An NFT allows the artist to sell directly to the consumer and retain more of the profits. Furthermore, artists can program royalties to receive a percentage of sales whenever their art is sold. Artists generally do not receive future proceeds after their artwork is first sold, which makes this a very attractive feature.
Making money with NFTs isn’t always about art. Charities have benefited from the sales of themed NFT art auctioned by brands like Charmin and Taco Bell. “NFTP” (non-fungible toilet paper) is what Charmin calls its offering, and Taco Bell’s NFT sold out in minutes to bidders who offered 1.5 wrapped ether (WETH) — equivalent to $3,723.83 at the time of writing.