With cryptocurrency like Dogecoin and Bitcoin making headlines and, in some cases, making people rich, a new way to virtually invest is gaining in popularity and, like crypto, comes with its own learning curve. With Tom Brady even getting into the act, NFTs are carving a huge niche into the pop culture landscape, so obviously, the gang talked about it.
What is an NFT, anyway? You may have been introduced to it via a recent sketch on Saturday Night Live, but if you missed that, here’s a definition. NFT stands for non-fungible token. Fungible assets like Bitcoin and physical money can be traded or exchanged for one another because they are equal in value. NFTs are one-of-a-kind and possess their own digital signature that deem equal trades impossible. NFTs are typically held on the Ethereum blockchain, which is a distributed public ledger that records transactions, as well as the way people can buy and trade cryptocurrency.
NFTs can be created or “minted” from digital objects representing tangible as well as intangible items. These can include anything from music to GIFs and video clips and even tweets. Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for almost $3 million. NFTs give you ownership of the work, but, just like traditional artwork, the artist still maintains copyright and reproduction rights. The biggest value to collectors is possessing the “digital bragging rights” for the piece, which are achieved with the built-in authentication that serves as proof of ownership of the work.
Surprisingly, NFTs aren’t new, they’ve been around since 2014. They have, however, become an increasingly popular way to purchase and sell digital art. Since November of 2017, it’s estimated that over $174 million has been spent on NFTs.
The most profitable – and famous - NFT to date is a digital piece called “EVERYDAYS: The First 5000 Days”. The work was created by famed digital artist Mike Winklemann, who goes by the name “Beeple.” The piece sold at Christie’s for $69.3 million. Two of Beeple’s other works, “Crossroads” and “Ocean Front”, sold for $6.6 million and $6 million respectively. Paris Hilton sold her own NFT art for $1.1 and some of your internet favorites have joined the fray. The Disaster Girl meme was sold as an NFT for over $407,000 and the well-known “Charlie Bit Me” video on YouTube was sold for $761,000 as an NFT.
In order to start collecting NFTs you need a digital wallet, which is where you store your NFTs as well as your cryptocurrency. Of course, if you don’t have any crypto, you’ll need to buy some. There are many platforms where your credit card can be used to buy tokens, including Coinbase, Kraken, eToro and even PayPal and Robinhood. Once you purchase the tokens, you can move them to your digital wallet if choice. Once your wallet is funded, you can start shopping. The largest NFT marketplaces are OpenSea.io, Rarible and Foundation.
So, now you know what an NFT is. Now, the question becomes, should you buy one? Demand for a specific NFT will dictate the price, as opposed to fundamental, technical, or economic indicators that influence the price of traditional stocks. It can be a pricey gamble, as if you purchase one and try to later sell it, you may get less than you paid for it, if there’s even any demand for it at all.
If you’re looking to have a one-of-a-kind digital artwork, just make sure to do your research, understand the risks and enter any transaction with caution and, if you have a cool $495,000 in your wallet, you can own the Overly Attached Girlfriend meme.