What is NFT and Why is Everyone Going Crazy for Them?

What is NFT and Why is Everyone Going Crazy for Them?

All of a sudden, everyone’s talking about NTFs, how they work and how much money people are making selling non-fungible tokens. Here’s what it all means.

What is a NFT or non-fungible token?

The simplest way to explain it is that they’re a unique digital object that isn’t interchangeable.

Often existing on the blockchain like a cryptocurrency, where they differ from something like a bitcoin or Ethereum is each token is unique.

This may sound like white noise, but what it means is that they’re a file that can have its authenticity verified and can’t be endlessly replicated.

What can be a non-fungible token?

They can be used for anything! It’s literally the process of turning any digital object into something that’s verifiable through different standards.

They tend to be either an image, audio or video — but the potential is limitless.

Although they’ve been around for a few years, recently we’re seeing major artists, musicians and creators releasing NFTs.

OK, can you explain why NFTs are worth money using an example that will help me understand?

Let’s take the Mona Lisa. It’s an object worth an insane amount of money. But where does that value come from?

It’s valued at an incredible amount because it’s both scarce (there’s only one Mona Lisa) and it has meaning — the artistry, who painted it, the cultural meaning that it’s come to hold.

It’s also worth something because it’s literally a piece of canvas with paint on it. If you, dear reader, painted your own version of the Mona Lisa, it would be worth something if you sold it at a flea market.

But that’s not where the majority of the value comes from.

With NFTs, they’re taking all the valuable parts of the Mona Lisa — the fact that it’s unique, authentic and has meaning — but just getting rid of the physical materials.

How can you make money from non-fungible tokens?

By selling them!

Like anything, NFTs can be worth any amount.

Since November 2017, more than US$174 million has been spent on NFTs. And that number has been rising rapidly as more people adopt them.

In February, the artist who created the Nyan Cat meme sold a NFT version of the artwork for $754,000. Just yesterday, musical artist Grimes sold nearly $7.6 million worth of her digital artworks as NFTs.

And this week a Homer Simpson Pepe NFT sold for $390,000.

How can I make and sell an NFT?

Non-fungible tokens are created when a user ‘mints’ them in the form of a token standard, typically on the Ethereum blockchain.

There are a number of minting platforms including OpenSea and Cargo.

Once you’ve minted it, you can sell it on a platform like OpenSea for cold hard crypto.