You’ve likely heard of NFTs dozens of times; it’s one of those buzz words on the news these days that goes hand in hand with cryptocurrency. You may have even heard Non-fungible token, but do you know what it means? Non-fungible tokens (NFTs) are digital assets which represent real-world items such as art, music, objects and videos. In short, NFTs are crypto-collectibles. In the same way people used to collect million-dollar prize baseballs and museum caliber art, NFT collectors find the item which resonates most with their passions – or desired price tag. And just like a real collectible – the value is in the fact that it’s one of a kind.
What Makes NFTs Special
This is where that non-fungible part of NFT comes in. You may think, it’s a digital artwork, can’t they just copy + paste? That’s the allure of NFTs; each has a unique code meaning only one exists. Furthermore, there is no standardized value amongst NFTs, so they cannot be transferred or exchanged on a 1:1 basis. This digital signature which makes each unique is also what differentiates an NFT from a cryptocurrency. All Bitcoins are equal to one another, but even each NFT from the same artist can be valued differently.
What’s an NFT’s Value?
So just how valuable are these digital art pieces, player cards, and even Tweet NFTs? Well Christie’s – the auction house known for selling icons such as Andy Warhol – sold the NFT “EVERYDAYS: The First 5000 Days” for the record-breaking amount of $69.3 million. A single Lebron James NBA Top Shot – basically a digital player card, highlight included – sold for over $200,000. Even a Tweet, a re-production of the co-founder’s first Tweet “just setting up my twitter” sold for more than $2.9 million.
Although each of these fetched quite handsome payments, what’s another thing they have in common? They’re all still images that can be found elsewhere in the world – for instance in news articles about these hefty sums of money. This leads to the concern many have about entering into the NFT world – the future is not certain. The value is only tied to what someone else is willing to pay. There are no certainties an NFT will be resold for even a comparable price. Also bear in mind that if an NFT is sold at a profit, it would be subject to taxes, just like when selling stocks.
With that in mind, however, NFTs have already proved to have real-world uses as a ticketing system and as proof of ownership for digital goods, it’s possible that the future of NFTs is that they are used as digital receipts for items or proof of ownership.