In March 2021, a JPEG file sold for $69 million. What possessed someone to spend so much money on a digital image? This JPEG is an NFT.
I am sure you have a lot of questions.
What actually is an NFT? How do NFTs work? Why on earth are people paying so much money for them?
Keep reading for a concise NFT guide that will give you all of the answers.
How Do NFTs Work?
So what are NFTs? An NFT is a certificate of ownership attached to a form of digital media. NFT stands for non-fungible token, meaning an NFT is distinct and is not interchangeable.
In contrast, assets like cash and cryptocurrency are fungible. It does not matter which dollar bill you own because each bill is worth $1. No value is derived from its individuality.
Think about it like this. Da Vinci’s Mona Lisa and Vincent van Gogh’s Sunflowers are one-of-a-kind paintings. You would not treat these items as freely interchangeable. NFTs make pieces of digital media unique in the same manner.
NFTs Prove Ownership
You might think this sounds a bit daft. You can just screenshot a piece of digital art, right? What is the point in paying for an NFT?
It comes down to proof of ownership. For the first time, there can be a verified single owner of an original digital asset.
A digital ledger called a blockchain records and verifies ownership of an NFT. Blockchains operate on a decentralized network of computers around the world, so it is impossible to destroy NFTs.
Types of NFT
When you heard of NFTs, it was probably to do with digital art. But that is just the tip of the iceberg.
Any digital item can be turned into an NFT. This includes audio files, videos, and memes. The only limit is your imagination.
Video game companies have started to sell in-game items as NFTs, usually in the form of digital cosmetics.
Where to Get NFTs
If you want to get your hands on some NFTs, you need to head to an NFT marketplace. Once you have created an account, add cryptocurrency to your wallet. For instance, Enjin Coin is used to back and trade NFTs. Check out the Enjin Coin price here.
Sometimes it is as simple as clicking buy, but many items are sold in an eBay-style auction.
You can also make your own NFTs. You can create a listing on the marketplace to sell your own NFT. Be warned, though. Publishing an NFT can carry a hefty fee.
The NFT Revolution
NFTs are an exciting twist in the rise of cryptocurrency, and they are here to stay.
It is only a matter of time before a friend or colleague asks you “how do NFTs work?” Now you have all of the info you need to fill them in.
Or you could just save yourself the effort and send them this article. Use the buttons below to share to your social media.