It’s been a banner year for NFTs, or non-fungible tokens.
Despite the fact that most people still don’t understand this new form of digital asset, they have entered the mainstream in 2021. Advertisements for NFTs are now frequently seen in tech hubs like San Francisco, and Austin, Texas. The market for NFTs has ballooned into billions of dollars, and celebrities of all kinds have hopped on the bandwagon.
Even with all that notoriety and growth, many of the people investing in NFTs still fail to fully understand the concept. So let’s take a dive into this subject and clear up some of the common misconceptions.
What Are NFTs?
The easiest way to think of NFTs is as a digital collectible. They are non-fungible because they can’t be traded or converted into anything else. Bitcoins, for example, can be traded into another type of cryptocurrency, or into cash in your hand.
NFTs aren’t like that. They are also supported by blockchain technology, which takes the original digital file and adds code that serves as a kind of certificate of authenticity. As such, NFTs can be anything: a work of art, a piece of music, an item in a video game, and a lot more.
This process has resulted in a large variety of virtual collectibles sold as NFTs, including trading cards, music and video clips, internet memes, virtual real estate, and even Tweets.
If that sounds confusing, you’re not alone. The exploding popularity of NFTs leads to many questions about the nature of ownership. For example, the digital artist known as Beeple sold an NFT artwork at Christie’s for $69 million. Anyone can download that image onto their computer with the click of a button, yet only the buyer can say that he owns the original artwork.
In that instance, it’s like buying an original Monet that you hang over a virtual fireplace. Critics will say that the virtual nature of these collectibles makes them fundamentally different from “real” collectibles.
But proponents say that collectors aren’t necessarily buying things for their market value. Vintage comic books can sell for thousands of dollars, when they were initially made and sold for pocket change. The same thing holds true with stamps or vintage toys or most forms of collecting.
The value is only determined by how much people are willing to pay for the thing.
How To Browse NFTs
Maybe you’re not sold on this idea just yet, but you’d like to see what all the fuss is about.
It’s easy enough to sate your curiosity — just start browsing NFT marketplaces. Websites focused exclusively on selling NFTs have grown exponentially in 2021, and offer a similar experience to any eCommerce website. You can search for specific kind of NFTs, like art or music or cute little avatars, see what kinds of NFTs are trending, and get a sense of the price ranges for these collectibles.
Some great examples of NFT marketplaces are OpenSea, Rarible and SuperRare. OpenSea is currently the largest and most popular NFT marketplace, with many thousands of NFTs and creators to choose from. Rarible and SuperRare take a more exclusive, boutique-like approach, only selling the work of artists they deem worthwhile.
More recently, that boutique approach has also been adopted by many startups, which have created their own NFT marketplaces selling unique NFTs not available anywhere else. Examples of those include Mogul Productions, which has an NFT marketplace for film and entertainment, S!NG, which focuses on musical NFTs, and many others. Even Reddit may soon be launching its own NFT marketplace.
A New Frontier
If the critics are right, then NFTs are just another fad that will quickly fade.
But with billions of dollars at stake, it’s no longer so easy to dismiss them out of hand. And if the supporters are right, then NFTs represent a new frontier for art, finance and much more.
At the very least, they’re worth a second look.
