NFTs.. What are they? How does it work?
By Faisal Akab*
From the year 2014 The NFTs started, but just recently as of the year 2021 they have started becoming more popular and has been in demand ever since. In this following blog NFTs will be defined and explained, and also what made NFTs shall be discussed in the following words.
Starting with the definition, NFT is the short form of the word non-fungible token. In other words the word non fungible makes it different than anything, meaning it is individual. As seen in the following figure (1.1) it is just another digital image that is labelled as art.
Bored Ape Yacht Club 5809
Courtesy of Sotheby’s
But something about this art makes it unique. Which is the label “owner”, this is the same idea as art, anyone could take pictures of paintings but only one person has the ability to own it, and owning it grants the person all the copyrights and reproduction rights that gives the buyer of the NFT a label. Of course NFTs are different for buyers, collectors and artists. Buying an NFT gives the buyer the rights to share the image and also a chance to support the artist to make more. Artists, just like any artist profits from the image they drew by posting it on a website for bidding, such websites like OpenSea, Rarible, Super Rare and so on. As you can see in Figure 1.1, this NFT could reach the price from $13.5 million to $20 million. Which may seem weird, but people would still buy it to profit from it even more in the future. Collectors tend to buy NFTs from an early stage so that later on they sell it for a very high value and profit from it.
What makes it different from Crypto currency?
Crypto currency is really different than NFTs. For example Bitcoin, as it is the most popular crypto currency, is Fungible since anyone could own bitcoin if they buy it and bitcoin is all the same coin, But, NFTs are different because they are drawn uniquely by individuals making the owner different than everyone by owning it. And owning it is what makes everyone want an NFT.
What makes NFTs popular now?
Not only that everyone is seeing it as an investment but big companies and celebrities are also starting to create such digital art, Marvel is one of the big companies that stared such thing. Elon Musk also had something to say about NFTs in twitter, he tweeted “I’m selling this song about NFT as an NFT” and in the song he followed it by the lyric “NFT for your vanity. Computers never sleep. It’s verified. It’s guaranteed”. Paris Hilton also used the Idea of NFTs to make a heart warming video Referring to her lost loved one (her grandmother).
As the whole popularity and idea of NFTs has been discussed. The next question would be is how is the next generation or the youth think about NFTs. Some people use NFTs just to have some spending money, whereas others, like an 18 year old who ended up having a total of $17 million worth of NFTs. These examples prove that no matter what, NFTs are now a major part of the investment world and they would remain in the market just like crypto currency.
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Block, F., 2021. ‘bored Ape Yacht Club’ NFT could fetch $12 million at Sotheby’s. Barron’s. Available at: https://www.barrons.com/articles/bored-ape-yacht-club-nft-could-fetch-12-million-at-sothebys-01630446214 [Accessed January 13, 2022].
Kolodny, L., 2021. Elon Musk turns down $1 million offer to buy his tweet as an NFT. CNBC. Available at: https://www.cnbc.com/2021/03/17/elon-musk-turns-down-1-million-offer-to-buy-his-tweet-as-an-nft.html [Accessed January 13, 2022].
Liscomb, M., 2021. 13 celebrity NFT projects from 2021 that almost got me to understand nfts. BuzzFeed. Available at: https://www.buzzfeed.com/meganeliscomb/celebrity-nfts-2021 [Accessed January 13, 2022].