We are all familiar with some of the NFT stories - young kids creating cat gifs or digital art and then minting them as NFTs and making a killing from them. There was also the first ever Twitter post created into an NFT and sold for a substantial ammount of money. But what exactly are NFTs and are they just a bubble?
NFT is an acronym for non fungible tokens. Non fungible just means that something is unique and cant be replicated in exactly the same way, for example, artwork and music and items in games. This is opposed to fungible which means something of equal value that can be traded, for example money is the classic example - one dollar is always going to be worth one dollar.
Therefore, NFTs are a form of digital contract which create ownership of digital assets. By buying an NFT you have exclusive ownership of a digital asset. If this is a rare or valuable piece of art its price could fluctuate and potentially go up in value - this is the appeal for investors.
That is the question alot of people are asking, why would I pay large ammounts of cash for something that is digital and thus easy to replicate?
NFTs are often rare and thus by design bound to atleast keep their price or go up in value over time. Take for example the original NFTs called Cryptopunks - there were only 10,000 ever created and thats all that will ever exist! Some are much more rare than others and thus worth much more.
There is also a market for using NFTs as collectible and tradable items, much like the traditional basketball or football cards or MAGIC cards. Each NFT item can have its own specific characteristics which make it more valuable.
There has also been a move towards using NFTs in gaming. Users can purchase items in game for their characters which can be used in the game or traded. I see there is massive value in this and it could change the landscape of the gaming industry.
Because NFTs are the latest buzz in the blockchain world they are risky as these new technologies attract many legitimate projects, but also many scammers. It can sometimes be hard to spot scams and many people will lose out.
There have been celebrities creating and endorsing NFTS, which will also bring more people into the market, many of them uneducated on NFTs and their risk. As always only invest what you can afford to lose and also do you research before spending any money! Looking at the team behind projects and their experience can be a goo place to start and spot potential scams.
What do you think about NFTs? Would love your thoughts as usual!
