What is NFT and Why is it so Popular
Have you been hearing about NFT and you are wondering what it is and why is it so popular and trending? NFT seems to be everywhere on the internet and social media right now. NFTs are the newest, coolest thing in crypto, representing digital ownership of multiple irreplaceable intangible assets.
NFTs are dominating the crypto market right now and there is no sign of it stopping very soon. A lot of people have made millions of dollars on NFTs and more people are putting their money into it with the hope of cashing out soon or in the future.
Should you invest in NFTs or are they just another bubble poised to pop, like the dot-com rage?
If you are thinking of investing in NFTs but want to first understand what they are, then this post is for you. In this post, you will know what is NFT, why it is so popular, and if you should invest in it.
What is NFT?
A Non-Fungible Token (NFT) is a digital asset just like bitcoin, representing real-world objects like music, video game items, and arts. They can be bought and sold online like any other property with no tangible form of its own.
An NFT stands like a digital receipt that tells that you own a collectible item. That collectible item can be artworks, videos, GIFs, photos, and songs.
Now, NFTs are not traded the same way as bitcoin. Bitcoin is fungible. You can trade 1 bitcoin for another fungible token. But it doesn’t work like that with NFTs. NFTs can’t be exchanged because it is non-fungible. Non-fungible means each NFT is unique and can’t be duplicated or swapped. If you trade it, you are getting something completely different.
For example, if you own a digital Mona Lisa painting registered as an NFT, you can’t trade it for another Mona Lisa painting because you won’t find any. You can only trade it for another different painting entirely or the monetary value in Ethereum or any other token allowed in the marketplace. This is why they are known as non-fungible tokens.
Even though an NFT is photographed or copied, the original remains the original, and the one that is copied doesn’t have the same value as the original.
When you buy an NFT, you own the absolute right as an official owner of the NFT. NFTs allow you to own the original item. Aside from that, the transaction is recorded in a digital ledger (Blockchain) serving as proof of ownership.
How Does NFT Work?
Just as we regard physical artworks as investments, NFTs are also potential investments. You can buy an NFT today and sell it for a much higher price tomorrow if the value of the NFT goes up.
The price of a particular NFT depends on the value placed on it by the public. People are not just buying the token, but the perceived value of what the token represents.
Even Twitter tweets can be sold as NFTs. Remember the story of Jack Dorsey, Co-founder of Twitter who sold his tweet for over $2.9 million? Yes, that was true. The buyer of that tweet owns the digital representation of the tweet which has been registered on the blockchain network. And even though anyone can photograph or copy it, it won’t have the same value as the original.
NFTs are mostly created and uploaded on the Ethereum blockchain. Most NFTs are Ethereum-based tokens. This means you can only buy them with Ethereum. If you already have a crypto wallet, you just need to fund it with Ethereum to buy any NFT of your choice on any NFT marketplace.
Why is it so Popular?
So, how did NFT become so popular that it is now even more trending than Bitcoin? The story will shock you.
Most people didn’t know about NFT until when a graphic designer, Mike Winkelman, also known as Beeple in the online art world created a piece of digital art called “Everydays” which was sold for $69.3m in an auction sale. It was recorded as the most expensive NFT ever sold.
Then in early 2021, Dapper Labs creator of CryptoKitties, a blockchain-based game, launched NBA Top Shot. This exploded the popularity of NFTs and a lot of people including NBA players started developing an interest in it.
Not too long, the news of Jack Dorsey selling his first tweet followed and trended for weeks.
These are just a few stories on how NFTs started making headlines worldwide.
Another reason NFT is also popular is that it also supports digital creators. Artists are now taking advantage of the trend and are creating digital arts. NFTs have given artists a new way to express themselves and make money from it.
A lot of celebrities have joined the buzz and are even creating their own NFTs.
Although NFTs are only limited to arts and entertainment in general, there is a great potential that it will cross to other sectors and industries.
Should You Invest in It?
The purpose of this blog post is not to tell you whether you should invest in NFTs or not. This post is for educational purposes. You need to conduct your research before putting your money in any NFT. Many people have lost millions of dollars in value of their money in NFTs. Chief example is the current worth of Jack Dorsey’s NFT tweet. Bought for $2.9M, the buyer got a top bid of $6,800 when he tried auctioning the NFT.
There are a lot of videos about NFTs on YouTube you can go and watch and educate yourself. You may luckily find a good course on the internet that you can enroll in to fully understand the business of NFTs.
Even with the popularity and millions of dollars in transactions, nobody knows the future of NFTs. And just like any other assets, NFTs come with their risks.
Remember, it is not the token that is selling, but the value and technology the token present. It works like supply and demand.
Does this sound interesting to you? Would you want to consider joining the buzz and give it a try? Just like when everyone was thinking Bitcoin won’t survive for long, that the government will look for ways to kill the idea, bitcoin is still in existence and gaining popularity all over the world.
This maybe the same fate for NFTs but it is not certain. The adoption of NFTs is increasing and may just be the new form of monetization for artists and creators.