A JPG (image) Sold For $69 Million! What Are NFTs (Non-Fungible Tokens)?
We’ve all heard the term NFT and the roar it’s creating, although mostly outside India. Cryptocurrencies have been grabbing headlines for years and now NFTs are doing the same. So, what’s the fuss about?
Remember the rage behind collecting Pokemon cards, some 25 years ago? Those kids who had the most cards basked in the glory. This is something like that.
Confused? Hold the Pokemon thought.
Let’s break it down.
What Is The Meaning Of NFT?
First off, NFT stands for Non-fungible Token.
The word fungible means exchangeable. For example, money is fungible. One Rs. 100 note can be exchanged for two Rs. 50 notes simply because money is fungible.
On the contrary, an NFT has unique properties and cannot be exchanged for anything else.
Think of a painting. You may have duplicates or print versions but the original will always be there. And now think of this original painting but in a digital format. Emphasis on the word original here. This is an NFT. A one-of-a-kind digital asset. But how do you know it is original?
How Does The NFT Work?
In the physical world, this painting is valuable because it is unique or original but in the digital world, the file can get cloned easily. NFTs would mean “tokenizing” this digital artwork which gives it a digital certificate of ownership and authenticity to make it unique.
The NFT which is the digital token tied to the painting can then be bought or sold on the blockchain (mostly Ethereum). The buyer gets a token that authenticates the “original” work.
NFTs can be anything digital – art, music, games or even a tweet. Yes, a tweet. $2.9 Mn was splurged on “Just setting up my Twttr” the first-ever tweet, published by Twitter CEO Jack Dorsey
Who Can Buy And Sell NFTs?
Anyone and everyone.
Any creator can mint NFTs on platforms and go on to sell them. “Minting” refers to creating a file on the blockchain that cannot be modified nor deleted.
And now the most important question. Why are they getting so popular?
NFTs are believed to be digitizing and thus, revolutionizing the mania behind collecting valuables. Now, let’s relate the Pokemon cards to this. It is the same but this time in a digital world.
Not just that. Artists who hold high-end exhibitions to showcase their work or musicians who would release physical albums can now target a much, MUCH, bigger crowd i.e the internet.
Why Are People Paying So Much?
Applying the scarcity principle here, we tend to place a higher value on objects that are limited, unique and scarce.
But really, so much value? Beeple, a crypto artist sold a JPG (image) for a whopping $69 Mn, making him the third largest most valuable living artist.
Some people are calling it a bubble, others are imagining a future of valuable collectibles. Whatever it may be, we sure do know that NFTs are having their moment.
Disclaimer – This content is purely for informational purpose and in no way advice or a recommendation