DeMYSTIFYING NFTS

NFT is an often repeated term nowadays. We routinely hear about companies making and trading NFTs. But they are still a mystery to many. What are NFTs? Are they a form of cryptocurrency? Or is it something entirely different?

NFTs refer to Non Fungible Tokens. Fungibles are those that can be exchanged with an item of equal value. Non-fungible means that they are unique and cannot be replaced with something else in trade. So, they are different from cryptocurrencies which are fungible. NFTs, as the name suggests, are non-fungible digital items that are bought and sold using blockchain technology. Blockchain technology is the digital public record of transactions used in cryptocurrencies.

NFTs are considered a new type of asset. Some of them have been sold for large sums of money, sometimes reaching millions of dollars. For reference, in March 2021, Christie’s auctioned off an NFT by the digital artist Beeple for an astounding $69.3 million. NFTs can be of anything as long as it is digital. Currently, digital art has been most associated with NFTs. They have become popular because it allows an individual the ability to buy the original item with a built in authentication. The only difference is that the buyer receives a digital file instead of a physical object. NFTs can have only one unique owner and it also allows owners to store specific information within them.

NFTs theoretically make it easier for artists and content creators to sell their creations directly. This lets them have greater control over both their art and their finances. However, it is not easy to get into NFTs as they are traded using cryptocurrency and stored in digital wallets. The value of an NFT depends on what the buyer is willing to pay and there are chances that it may resale for less than the initial price paid.

Gopika P is an ex-lawyer turned journalist who loves writing about the latest tech and can produce a mean movie review. Just don't ask her to write about law, ever.