Every week, hundreds of millions of dollars are spent on NFTs.
This new asset class of digital collectibles went from a small-time fad to pop culture sensation in less than a year. They got parodied on Saturday Night Live, embraced by celebrities from Grimes to Snoop Dogg to Stephen Curry.
NFTs are new, confusing and not going anywhere. But what the heck are they?
Non-Fungible Tokens
If you’ve spent any time studying or working with finance, then you’ve probably heard the term “fungible.” It’s a fancy finance word used to describe any good or commodity that can be traded for something else, like cash or crops.
But non-fungible assets can’t be traded for something else, like real estate, cars or paintings. Traditionally, non-fungible assets are tangible. You can see the brush strokes on the painting in your living room, or drive your sports car.
What NFTs have done is create a way for intangible assets, like digital images (or any digital file, really) to also become non-fungible.
This is accomplished through the blockchain, a foundational technology that allows creators to turn any digital file into a unique and non-interchangeable unit of data stored on a digital ledger.
This confuses many people because anyone could presumably click on your $1,000 NFT of a pixelated, sardonic ape and download it to their desktop. The difference is that only you have the “original.” For many people, that’s a distinction without a difference, but the continued rise in popularity of NFTs suggests they are redefining ownership in the digital age.
What Kinds Of NFTs Are There?
At this point, it seems like just about anything can become an NFT: Internet memes, digital art, music, films, paintings, video games, in-game items — that’s just the beginning.
A quick Internet search will reveal plans in the works to sell all kinds of physical products, like high-end spirits, fashionable clothing, and sports memorabilia, as NFTs. There’s even a growing trend to sell uber-expensive items, like a famous painting, for example, into fractional shares, so that dozens or even hundreds of people could end up owning a percentage of a single asset.
It’s unclear if all of these new attempts to capitalize on NFTs will actually succeed, but that’s not stopping startups from doing their best to create a new niche in the marketplace.
Where Can You Buy Them?
You should first check out the biggest NFT marketplaces out there right now.
These include OpenSea, Rarible, SuperRare, Nifty Gateway, Foundation, Crypto Punks, NBA Top Shot, and Axie Marketplace, which is specifically for the game Axie Infinity.
But there are many other newer contenders trying to bring NFTs into previously unexplored industries.
Mogul Productions, a self-described decentralized film financing (DeFiFi) company, has launched an NFT marketplace aimed solely at movie lovers looking for film-related NFTs. Mogul Productions also makes its own films, involving its community of filmmakers and film fans in the process. With a system that allows users to weigh in on scripts through STARS Tokens, Mogul aims to offer the first “crypto movie.”
Another example is OneOf, which describes itself as a “green NFT platform built for the music community to connect fans and collectors at all levels with their favorite artists.” The environmental impact of crypto currency in general and Ethereum specifically (the crypto used to buy most NFTs) has been an ongoing issue, especially for artists concerned about climate change, which is why OneOf may continue to be popular.
This is a big, brave new world to explore, and you’ll need to do plenty of research before you start buying. But even the most skeptical observers have begun to acknowledge that NFTs are clearly here to stay.
