13 January 2022 · Entrepreneurship & Business · 2 min read
NFT: What's All the Hype?
What non-fungible tokens are, why ownership is the one word that defines them, and why artists, buyers and collectors each wanted in.
In our modern age, everything around us is evolving into things the older generation would find either weird or fascinating. Computers and cell phones evolved into touch screens, and cars are now charged instead of fueled. But the top of the story is virtual money. People are increasingly interested in dealing with money that has no physical form, because few still want to carry around paper and cards when value can move in a matter of seconds.
One of the latest phenomena going viral is the NFT. Each letter stands for "non-fungible token". Fungible means something can be replaced or exchanged with another identical item of the same value, just like a dollar bill: you can exchange one dollar bill for another one with a different serial number. NFTs, on the other hand, are non-fungible, which means they are unique and cannot be interchanged. No two NFTs are the same.
What does an NFT provide?
"Ownership." That is the one-word definition of an NFT. It is a digital asset that links ownership to digital items. In more depth, NFTs are modern-day collectibles: bought and sold online, they show a digital proof of ownership of a given item.
So why are people going crazy for NFTs?
Let's answer this question through three points of view.
First, artists such as painters, digital art creators and musicians are the most interested in NFTs, because they open a way to sell work for which there might not otherwise be a market.
Second, buyers. They buy art not only to financially support artists they like, but also to gain basic rights, such as posting the image on social media, because the digital item is officially owned by the individual who bought it.
And lastly, collectors, who buy and hope that the value will increase one day so they can sell it for a profit.
To compare it to traditional art collecting: there are endless copies of the Mona Lisa, yet there is only one original. That is where an NFT helps designate the ownership of the original piece.
In sum, people have found one of the easiest, yet most challenging and nerve-racking, ways of making money. It requires a good instinct for what to pick and buy, patience to know when to resell, and real thought about where and how to use what was bought when it is not intended to be sold again.