The world of NFTs is changing by the minute but what are they? NFTs, or nonfungible tokens, can be tied to a. Think of them as tokens tied to an expensive digital asset. It may (or may not) be able to make you a lot of money in the future (more below). NFTs are like cryptocurrency but there are some big differences. We know, it’s complicated.
Here’s what we know. You can bid on an NFT for a pretty penny (most are expensive). But that doesn’t mean that you own the asset. These expensive tokens are so popular that Variety and the NFL are all kickstarting NFTs. And if you remember Neopets, the virtual pet space is creating NFT collectibles, too.
In short, NFTs offer a blockchain-created certificate of authenticity for a digital asset or piece of art.to you, it’s OK. We’ll break down what NFTs really are, how much they cost and how you can bid on a digital asset to have an NFT of your own.
What’s an NFT?
This is the part that takes a bit of open-mindedness. An NFT is a unique digital token, with most using theblockchain to digitally record transactions. It’s not a cryptocurrency like Bitcoin or Ethereum, because those are fungible — exchangeable for another Bitcoin or cash. NFTs are recorded in a digital ledger in the same way as cryptocurrency, so there’s a listing of who owns each one.
What makes an NFT unique is the digital asset tied to the token. This can be an image, video, tweet or piece of music that’s uploaded to a marketplace, which creates the NFT to be sold.
What kind of NFTs can I buy?
NFTs can be tied to any digital asset. Anything you see online can be an NFT — music, social media posts, clip art and more. Here are some of the latest nifty NFTs we found.
The latest big news in NFTs is TikTok’s new video collection called TikTok Moments. The videos will celebrate the impact that artists have on TikTok. Proceeds from the collection will go to NFT artists and creators. The first collectionand be available starting Oct. 6 on the Etherum.
And Fortune gave its readers a chance to get in on the NFT craze. The company sold 256 copies of the limited edition cover from the graphic artist Pplpleasr for Fortune’s August/September magazine on OpenSea. The copies sold out within five minutes starting at 1 Etherum (estimated $3,000). But the NFTs were available for resale at three times the cost.
Sorare digital trading cards
But NFTs go beyond artists and music. Recently, Sorare released its “Super Rare” Lionel Messi digital trading card that’s currently bidding at €29,992.75, equivalating to over $35,000. Sorare also announced that it raised $680 million for its next-level sports fantasy game. The funding is currently led by SoftBank.
Tiger Woods’ Autograph collectibles
And in sports, Tiger Woods is currently selling thousands of digital collectibles on Autograph on the DraftKings marketplace. The collection starts at $250. Naomi Osaka, Derek Jeter and Tonk Hawk are also releasing digital collectibles on Autograph, which is co-founded by Tom Brady.
As the hype for NFTs grows, expect more digital assets to come up for sale and bring in some big money.
Where can I buy and sell NFTs?
While you may not want to jump right in bidding six figures, there are multiple NFT marketplaces out there to check out, with Opensea being the biggest. Buyers can search for art, domain names and random collectibles to bid on without having to break the bank. And Woods’ digital collection is one of the many NFT collections available on DraftKings marketplace, including Tony Hawk, Simone Biles and other athletes.
And Christie’s recently auctioned off NFTs of featured Art Blocks art from its Post-War to Present collection, some of today’s most popular NFTs. Christie’s auctioned off Curio Cards on the Ethereum blockchain for over $1.2 million.
On the other hand, if you want to sell an NFT of your art, you can use NFTify, the Shopify NFT store, to sell NFTs without creating your own store. You’ll also need a MetaMask account to get going. And Burberry recently announced a partnership with Mythical Games to gamify buying, selling and collecting toys as NFTs through the Blankos Block Party game. CNET’s own Chris Parker also made a step-by-step guide on how to make and sell your own NFT, in the video below.
If I have an NFT, do I own the asset?
That’s the real kicker to understanding the whole concept. The person who buys the NFT doesn’t own the actual asset.
“NFTs challenge the idea of ownership: digital files can be reproduced infinitely and you do not (usually) buy the copyright or a license when purchasing an NFT,” said Jeffrey Thompson, associate professor at the Stevens Institute of Technology in Hoboken, New Jersey.
For example, the creator of thesold an NFT of it for $590,000. The person who bought the token owns the token, but doesn’t actually own the meme. That still belongs to the creator, who held onto intellectual and creative rights.
What the owner of the token has is a record and a hash code showing ownership of the unique token associated with the particular digital asset. People might download Nyan Cat and use it on social media if they want, but they won’t own the token. This also means they can’t sell the token as the owner can.
Why are NFTs so expensive?
As with physical collectibles such as Beanie Babies, baseball cards and toys, there’s a market for NFTs. The buyers tend to be tech-savvy individuals who understand the idea of wanting to purchase digital goods and likely made a killing this past year with cryptocurrencies. Ethereum, for example, went from just over $100 last March to a current price of about $3,400. In some cases, buyers are just flexing their digital wallets to show off how much crypto they have, but for others, there’s a deeper interest.
“Specifically for art-related NFTs, there is a huge surge in demand due to their novelty and creativity of early artists,” Jason Lau, chief operating officer of crypto exchange OKCoin, said in an email. “Whether it’s a physical work with an attached NFT (think of it as a digital autograph and proof of veracity), or an entirely digital work (where the NFT is the art), this new medium is opening new ways for collectors and artists to explore their relationship with the artwork itself.”
It’s also great for the artists, says Lau. By selling digital art directly to those interested, an artist can begin monetizing work without having to try to sell it in a gallery.
What are the pitfalls of NFTs?
A drawback is the hundreds of dollars in fees required to create an NFT. If you’re making your own token on the Ethereum blockchain, you need to use some Ethereum, which as mentioned earlier is kind of pricey. Then after you make an NFT, there’s a “gas” fee that pays for the work that goes into handling the transaction and that’s also based on the price of Ethereum. Marketplaces simplify the process by handling everything for a fee when an NFT is sold.
There’s also an environmental cost. Like Bitcoin, Ethereum requires computers to handle the computations, known as “mining,” and those computer tasks require a lot of energy. An analysis from Cambridge University found that mining for Bitcoin consumed more energy than the entire country of Argentina. Ethereum is second to Bitcoin in popularity, and its power consumption is on the rise and comparable to the amount of energy used by Libya.