This article has been reviewed by Sumeet Sinha, MBA (Emory University Goizueta Business School). Should you have any inquiries, please do not hesitate to contact at firstname.lastname@example.org.
If you follow the news at all, you might be wondering ‘What is an NFT or non-fungible token?‘ and what is all the fuss about? NFTs or Non-fungible Tokens are a certificate of authenticity and uniqueness on the blockchain. NFTs help write the record of the owner on a blockchain (for example, on Ethereum blockchain).
Many things, such as art, derive value from scarcity – there can be just one or a few masterpieces of art! The creator of the NFT can determine the scarcity of the digital asset as well to help determine the value of the asset in the market.
Throughout modern history, pieces of art on canvas have sold for hundreds of thousands, even millions of dollars. Recently a piece of digital art sold for over $69 Million. Beeple, the digital artist, sold his digital art via an NFT to a bidder for $69M in early March 2021.
Key Features of an NFT (Non-Fungible Token)
The three key features of NFT are Uniqueness, Ownership, and Tradability.
- Uniqueness – Each NFT is unique and one identifier is associated with each NFT.
- Ownership – Owner of the digital asset can be easily verified via blockchain.
- Tradability – Buy and Sell transactions of digital assets are possible NFT markets.
Why can’t you just copy and save copy of the .jpeg or .png file?
Surely you can, but the rightful owner is determined by the NFT.
To think about it, you can do the same with print art. Take a picture of the Mona Lisa on your phone, print it, frame it, and hang it in your living room. Voila!
Until now, no one could actually ‘own’ a digital piece of art. You could claim ownership by posting it first on Instagram or Flickr, or by adding ‘watermarks’ to your art to stake your claim. But NFT brings in credibility to owning digital art and other assets such as gif files.
How Can You Make an NFT?
It’s a simple process actually. You need your digital asset, a digital wallet, some Ethereum, and access to an NFT marketplace such as Nifty Gateway.
Selling your asset for $69 million might be a more difficult task though!
However, NFT might create a new asset class of digital art and may well be regarded as a legitimate alternative investment in the near future.