Non-fungible tokens, or NFTs, have become an overnight investment phenomenon with $ 60 million in sales Tuesday– the total sales for the whole of 2020. An NFT is a type of cryptographic sign used to make digital media unique and therefore collectible, whether it is a GIF or even a sports highlight. If you’re wondering why everyone suddenly forgot how to take a simple screenshot, or were otherwise surprised by this, you are not alone.
What are NFTs?
Using blockchain technology, NFTs designate an official copy of digital media, which can then be sold by artists, musicians or sports businesses to monetize content that would otherwise be cheap or free. NFTs differ from cryptocurrencies because they are not exchangeable – each one is unique.
If you are buying an NFT through a crypto asset market, it is up to you to keep it in your digital wallet or sell it on the market. When sold, all computers in a decentralized network record the transaction on a shared ledger, which is in fact a certificate of authenticity that cannot be changed or erased.
NFTs have a wide range of uses, including collectibles sports cards, digital art, a virtual real estate. Per Yahoo, brands like Nike, Louis Vuitton, and the NBA has already started generating NFT-based assets, with the NBA launching a dedicated collection site called NBA Top Shot. Last week, artist Chris Torres released a unique rendition of Nyan cat, a popular meme of a flying cat with a Pop-Tart body leaving a rainbow trail, for about $ 580,000, according to the New York Times. Rick and MortyJustin Roiland’s too jumped into NFTs.
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Why would anyone spend money on this?
It may seem bizarre to buy the ‘authentic’ version of something you can easily get rid of from your desktop, but it’s easy to overlook the emotional value of collecting, especially when it comes to original art. Some of the appeal is the possession of an authentic item created by an artist, and the bragging rights that come with it. In essence, it’s not much different from owning an original Andy Warhol painting that can be displayed, sold, or shared – it happens to be digital. Plus, crypto-art eventually unlocks the problem that artists get paid, since the creators can program these assets to pay royalties on them every time the collectible is sold.
On top of that – and possibly even more importantly (if we take the renewed interest in NFTs, which has been around for years) – people are increasingly seeing these digital assets as speculative investments as they can be bought and sold on online markets (an NBA Top Shot digital trading card from basketball player LeBron James recently sold for $ 100,000, for example).
The increase in leisure investments during the pandemic is probably also a factor: most of these exchanges naturally accept cryptocurrencies, which meet the demand of individual investors who have cryptocurrencies and who want to spend it on something that is fun and potential to later to earn more money. Whether this interest will remain in maintaining the valuations of a flying cat GIF of half a million dollars remains to be seen.