What The Heck Is NFT Hype All About?
A video clip of LeBron James sold for more than $200,000 as an NFT. Logan Paul sold NFTs worth $5 million. Digital artist Beeple sold a 10-second video clip for $6.6 million. Mike Shinoda, co-founder of Linkin Park launched his single “Happy Endings” as an NFT.
So, What’s this trend about the NFT? What’s the hype all about? How does NFT work?
There are a lot of questions about NFT. And, in this blog post. I’ll try to answer your questions about it. Making it completely clear for you, even if you don’t have any idea about the blockchain space.
What is NFT? What does it stand for?
NFT is an acronym for Non-fungible tokens. NFTs are digital assets. Non-fungible means one of a kind. It’s kinda like a rare collectible. That you see at museums.
Unlike other currencies in crypto and blockchain, like with bitcoins and Ethereum. You can’t exchange NFT for an NFT because they are all different.
Anything virtual or digital could be sold as NFT. Raging from wearables, games accessories, digital art, video clips, audio, virtual real estate, domains, or even tweets. And, a lot more stuff like that.
A Short Glimpse at The History of NFT
The NFTs have been around the corner since 2013. They grew popular in 2017. CryptoPunks and CrypoKitties were given away for free for the blockchain games. Later, they were sold. Now, the valuable CryptoPunks sell for more than $1 Million and CryproKitties sell for more than $100,000.
CryptoKitties showed the real potential of the NFTs. There were huge buying and selling of virtual cats.
This attracted huge funding for Dapper Labs, known for making the popular blockchain game. The Warner Music Group made an investment of $11 million in the game.
2018 and 2019 pumped up the NFTs even more. There were marketplaces introduced for selling and buying NFTs. 2020 spiked the popularity. People got more aware of the NFTs during the quarantine days. There’s more than $174 million spent on nonfungibles to date.
How Does The NFT Work?
NFTs are purchased and sold in exchange for cryptocurrencies. Most are part of the Ethereum blockchain. Although if the NFT owner decides, they could exchange it with other currencies too, like bitcoin or dogecoin. Every NFT has a different token. And, blockchain can trace every nonfungible asset based on the tokens.
When someone decides to sell some digital asset as an NFT. If the NFT is valuable they have an auction for it. And the highest bidder gets the NFT. So now the NFT is owned by a new collector. The new collector could keep it to themselves or sell it later.
The interesting part is whenever NFT is sold. The original creator of the NFT gets a cut. Kinda like royalty.
You can understand this with an easier analogy…
You go to an art museum and lookout for the best art. It’s by your favorite artist. You decide to purchase it at an upcoming auction. You go to the auction and own the art.
Later, You wish to sell that to someone. You find another fan who’s offering you a fair price and you sell it to them. And, now as you sell it the original creator of the art will also get the royalty on the sale you made.
Who Is Buying The NFTs?
Previously, there were collectors of tangible things, in this era, people are collecting Digital art and Digital collectibles. Which makes complete sense from their perspective because it’s the digital era.
Gamers are collecting wearables and gaming accessories, as having rare NFTs makes them look cool. Fans are collecting the works of their favorite artists. And, some people always enjoy collecting rare collectibles.
How is NFT benefiting the Artists and creators?
As I said earlier, whenever an NFT is sold, the original creator of the NFT gets a cut of it, making it a source of extra bucks for the original creator of the NFT.
NFT makes fans access to their favorite artists and rewards artists with what they deserve.
Artists or content creators which have decent fan following could make decent money through the NFTs. They get money when they sell it. And, when their work is sold to another fan.
Recently, Jack Dorsey auctioned the very first tweet in history as an NFT — and the highest bid was $2.5 million.
NFTs are here to stay for a long game.
There’ll be more NFTs coming up from celebrities, artists, and creators. There’ll be more money spent. Many will make fortunes out of this.
If you’re an artist, go ahead with your art. If you aren’t, think of creative ways to create digital assets that could fetch you money. If you’re a buyer, be wise with your investments.