The rise in popularity of cryptocurrencies over the past five years has led to the crypto industry becoming a part of the daily lives of millions of people. With this growth in popularity we have also seen crypto use cases evolve and grow. There are now more ways than ever to use/spend your cryptocurrencies. However, while many people understand cryptocurrencies such as Bitcoin and Ethereum, questions we hear a lot are What are NFTs? and What are NFTs used for?
But What Are NFTs?
NFT stands for non fungible token. When something is fungible it means that its mutually interchangeable, for example, money. But when something is nonfungible it is unique and not interchangeable with anything else. Things such as works of art might be seen as non fungible as they are one of a kind. A painting from an artist can never be produced again. In this case an NFT is a unique digital token representing an asset that is not under changeable any other asset.
In simple terms the tokens are a digital receipt and can be anything from real life assets like property to online assets like artwork. There are examples of assets that have been tokenised such as tweets, GIFs, videos and even a photo of an article. One high profile NFT sale happened in March 2021 when Twitter co-founder and former CEO Jack Dorsey sold his first ever tweet as an NFT for over $2.9million.
NFTs use a small packet or block of data which is created and stored in a blockchain. Two of the most popular cryptocurrencies for hosting NFTs on their blockchains are Ethereum (ETH) and Solana (SOL). However, there are other tokens such as Cardano (ADA) which can host NFTs.
How Are NFTs Changing The Art World?
NFT art has become increasingly popular after a digital artist sold a collage at Christies auction house for $69 million in March 2021. This was the most expensive NFT ever be sold to one owner. Since then, the art and finance worlds have jumped on NFT art. Some have even said that it is the next evolution of digital commerce and there has been a flurry of artists organising their artwork to sell as NFT‘s.
Image: Beeple
So Why Buy An NFT?
The NFT market has been created around the concept of digital scarcity. There are thousands of different NFT art projects and tokens that you can invest in. Some projects have a real use case while others are still in the early stages of development. So make sure to read more about different NFT projects before purchasing.
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