What Are NFTs?

What are NFT’s?

“Right click, save as.”

NFT’s have exploded into the pop-culture lexicon over the past year. In fact, Meriam Webster’s dictionary named it the most popular word of 2021, but just what exactly makes these digital pictures unique from other jpegs, and why are they going for millions of dollars and being adopted by some of the world’s biggest celebrities, athletes and influencers?

The Blockchain

NFT’s exist on what’s called a ‘blockchain.’ There are several types of blockchains that are composed of different cryptocurrencies (like Bitcoin), the most popular of which is the Ethereum blockchain. These blockchains record transaction information on a ledger and help identify the owner of a particular NFT, basically like a digital receipt.

What’s an NFT

NFT stands for ‘Non-fungible token’ which means that more or less whatever NFT you possess is completely unique and cannot be replaced or replicated by anything else. NFTs are basically jpegs with transaction ID’s that point to the owner.  Sure, you can “right click save-as” to save an NFT to your computer and use it as your profile picture, but that digital receipt on the blockchain will always point back to the original owner.

So why the heck are these pictures so valuable, what gives?

It really comes down to what people perceive the value of an NFT to be, just like any other piece of art. However, there are a lot more variables that go into what the value of an NFT can go for other than just its art design like its utility.  

What does the future of NFTs hold?

The future of NFTs is fascinating. You will probably see tickets for events become completely digitized as NFTs in the next few years. It sounds crazy, but almost anything could be an NFT in the future, from car titles, to album covers to plots of physical land.

WAGMI or Rug Pull?

The current landscape of NFTs is murky. There are countless scams, or “rugpulls,” where users are swindled out of their money. NFTs have been compared to Ponzi schemes, and critics also argue that they are bad for the environment and are used for money-laundering schemes.

Like many recent web3 developments, at its core, NFTs give power back to the people. Underpaid graphic artists can become overnight millionaires and same with savvy investors. Ultimately, NFTs are like any other investment, and like any investment, people need to be prepared to only spend whatever they are willing to risk and to do their own research. Like the early days of the Internet, NFTs are in the ‘wild-west’ phase- there are very few regulations, and little understanding; but like the wild west, the opportunistic may strike gold… or lose it all trying.