Nowadays anything and everything related to the blockchain is exploded with controversy you just can’t comprehend. Something you will also feel when I say that the original Nyan Cat Gif is sold at 300 ETH or roughly about $650K.
Wait a minute! Why would anyone buy a Gif which is freely available on the internet, here check the one below for yourself, with music in case you forgot.
Seems strange right? Well, that’s because it was sold as an NFT or Non-Fungible Token. I know I am still not making any sense but stay with me.
In economics, a fungible asset can be something that can be replaced with something else of the same value. For example, you can swap your $5 bill for five $1 bills and the value of your assets will remain the same.
In the case of a Non-Fungible Asset, like in the case of NFT, the ascertained value is unique for every asset so they can’t be easily substituted. Think of the painting of the Mona Lisa, while you may buy a poster of the same size online or someone could paint you a replica, the original would remain the one with a greater value.
How do they work?
Think of NFTs as some sort of digital signature, certifying the authenticity of the digital artwork. Just instead of a physical certificate, the signature is recorded in a blockchain ledger. This means that specific pieces of information are stored in the blockchain network like who owns the digital asset, who sold it and when it was sold.
And since they work like any cryptocurrency, they are hard to forge as the ledger is maintained by thousands in the network.
Working on the basic fundamental of scarcity. Think of it as a difference between a basketball with an autograph by Michael Jordan and one without, just in this case the asset is digital.
Aren’t Cryptocurrencies like Money? Fungible.
Although when someone thinks of cryptocurrencies like Bitcoin they think of them just as a replacement for money which is a Fungible asset there are other cryptocurrencies which have their unique features.
For instance, Ethereum is the base of many of the currently offered NFTs as the ERC-721 token it supports enables creators to save relevant information about their assets and save it on the blockchain.
Why are they worth Millions?
The Market for NFTs exploded in 2020 climbing to a value of $338 Million. While in theory anyone can create an NFT Token and sell it at whatever value they wish to. The recent push with multi-million dollar headlines might just be one of the reasons. A viral sensation which may or may last.
For instance, one of the popular auction houses this year sold a digital art token by artist Beeple for a whooping $69 Million setting a new record.
People are selling everything using these tokens thanks to the crazy demand surge. Like quite recently this band called “Kings of Leon” released their NFT version of their new album, titled When You See Yourself, something their fans might buy.
Where to get one(or sell)?
If you are a seller or a buyer looking to cash on this NFT fever while the bubble lasts, there are many marketplaces where you can get one. These include OpenSea, Rarible, and Grimes’ choice, Nifty Gateway, but there are plenty of others. In no way I am recommending any of these but they do exist if you want to check them out.
The NFT Economy
The future of NFT is still unknown. According to some experts, it will be a short-lived formula to get rich very quickly. But some investors give a green signal to this technology. Now, it is totally up to you how you will manage this technology or ignore it.
One thing is for sure due to this NFT Boom (and Dogecoin (and psst Elon Musk)) there is a more favourable outlook of the general audience towards this crypto-economy. The next couple of years will be the changing factor in shaping the NFT market as the technology and the market would mature further.
Yet, before you make any investments, do know that these carry a high-risk and always be mindful before betting your hard-earned money on it unless Elon Musk tweets about it (😅).
