NFTs are changing the world. A relatively new idea, NFTs pose a huge opportunity for investors to make significant money off both digital and physical assets. While NFTs can be confusing, understanding what they are and how they can benefit you financially will prove to be extremely beneficial in the future.

NFT, or non-fungible tokens, are assets that represent collectibles such as art, music and games. NFTs are unique and cannot be forged. They can be both digital and physical assets. NFTs are created using the same type of programming used for cryptocurrencies. These cryptographic assets are based on blockchain technology and cannot be exchanged or traded equivalently like other other cryptographic assets.

An example of a physical asset would be the fashion retailer GAP recently launching its first NFT collection that unlocks physical hoodies. Physical NFTs are something that is attainable physically, and something you can own in the real world. An example of a digital NFT is Bored Apes Yacht Club. BAYC is a collection of 10,000 Bored Ape NFTs which are unique digital collectibles living on the Ethereum blockchain. These NFTs are not physical, but you can own them digitally, making them a digital asset.

NFTs will authenticate and verify ownership of assets by using blockchain technology to create a unique, indivisible token representing the digital asset. NFTs also enable the creation of new revenue streams for creators and artists. Artists can sell digital versions of their artwork or music directly to collectors, skipping traditional selling steps. NFTs will also facilitate the trading of digital assets, allowing collectors to buy, sell, and trade digital assets with confidence. Facilitating the trading of digital assets will help create a secondary market, leading to increased liquidity and value for these assets.

NFTs are being sold for record numbers of over $60 million for an individual NFT. What we are likely to witness is a shift from NFTs ascribing digital ownership to providing a whole host of features, including special discounts and memberships. A predicted next wave of financial innovation will see retailers honing in on NFTs to extend the customer journey beyond the checkout line, with the aim of building a loyal community and creating brand longevity.