What is an NFT? NFT stands for non-fungible token. Let’s start by describing a fungible token. In economics, a fungible token is something that has units and can be easily interchanged, like money. For example, you can swap one 20bs. bill for two 10bs. Ones. However, if something is non-fungible, it means it has unique properties and can not be interchanged with something else. Some examples of fungible tokens could be a house or a painting like the Mona Lisa, which are one of a kind. You can always take a picture of the drawing or have a print of it, but there will always only be one original copy. NFTs are unique or “one of a kind” digital assets that can be bought and sold like any other piece of property, but they have a non-tangible form of their own. These digital tokens can be represented as certificates of ownership for virtual or physical assets.
You may be thinking if this “art” is virtual, can’t I just take a screenshot of it or a screen recorded and I will have exactly the same copy? Well yeah, digital files can be easily and endlessly duplicated. The thing is that with NFTs, artwork can be “tokenized” to create a digital certificate of ownership that can be bought and sold. As with cryptocurrency, a record of who owns what is stored on a shared ledger like the blockchain. NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.
In theory, anyone can tokenize their work in order to sell it as an NFT. On February 19, 2021, and NFT of Nyan Cat (Nyan Cat Gif) sold for more than $500,000. A few weeks later, Musician Grimes sold over $6M in digital art. But it’s not only art that is being sold; Twitter’s founder Jack Dorsey sold and NFT of the first tweet ever, with bidding hitting $2.5M. Even though many people are skeptical about the future of NFTs and probably most of them will depreciate in value greatly, I believe that a few of them will actually be a good investment and could 100x in value. And just to make the concept of an NFT simpler, a skin you buy in Fortnite or COD can be considered as an NFT, which means that 99% of the gamers I know actually own an NFT.