What Is an NFT?

If you’re curious about NFTs, you’ve come to the right place.

NFT stands for Non-Fungible Token. Right off the bat, that sounds intimidating. Are we talking about…fungus? We are most assuredly not; in fact, a Non-Fungible Token is a digital asset that’s unique and is not interchangeable with any other NFT. That’s what sets it apart from cryptocurrencies.

You can think of it like a collector’s card but in digital form.

How do you make something that’s one-of-a-kind on something so prone to plagiarism as the internet? Good question. The answer lies in the blockchain, which is a secure and transparent digital ledger that keeps track of all transactions and is virtually unhackable.

This means that an NFT is not only unique but also there’s a record of ownership that can’t be changed or duplicated.

Right, but What IS an NFT?

Okay, okay, good point.

NFTs can be anything digital: a piece of artwork, a video clip, a tweet, a song, or even a virtual real estate space. Because their creators build them using blockchain technology, they are both digitally own-able and scarce. This means the original creator can sell their NFT, and the buyer will have the original digital asset, while others might only have access to copies or replicas.

One of the main places NFTs have flourished is in the art world, where assigning value to things has always been a fairly fluid and fickle process. Artists can sell their digital art and have a record of ownership that can’t be disputed.

Another arena where NFTs have become popular is the gaming world. Here players can buy and sell unique virtual items that give them an advantage in games or show off their status.

To summarize, NFTs are unique digital assets that use blockchain technology to create a secure and transparent record of ownership. They can be artwork, tweets, songs, virtual items in games, and so much more. They’ve opened up a whole new world for creators, collectors, and fans to engage with each other and the digital world.

How Are NFTs Made?

We mentioned that a person creates an NFT using blockchain technology. Let’s dive a bit deeper into how that works.

First, the creator of the NFT will typically create a digital asset, like a piece of artwork or a video clip, and then upload it to a blockchain platform. This creates a clear record of ownership — the artist uploaded this unique artwork to the platform at this time on this date. Then the platform creates a unique digital token, the NFT, that represents that specific digital asset.

This record of ownership allows the original creator to sell their NFT and transfer ownership to the buyer.

Once the NFT is sold, the blockchain platform will record that transaction as well. This creates a transparent and secure log of ownership. This process ensures that the NFT is one-of-a-kind and has a record of ownership that can be verified by anyone on the blockchain.

Examples of 5 Popular NFTs

Here are five popular NFTs that have gained a lot of attention recently:

• “The First 5000 Days” – In March 2021, this NFT sold for a staggering $69 million. It features a collage of 5000 images the artist Beeple created for his “Everydays” series.
• “CryptoPunks” – These NFTs are autonomously generated 8-bit-style characters with punk-ish attributes. They’ve become a popular digital collectible and some sell for millions of dollars.
• “Nyan Cat” – This pop culture icon was turned into an NFT in February 2021 and sold for over $500,000.
• “Virtual Real Estate” – One of the most exciting types of NFTs is the creation and sale of virtual real estate spaces in games like Decentraland and The Sandbox. Some sell for thousands of dollars.
• “Twitter CEO’s First Tweet” – This NFT is a digital representation of Jack Dorsey’s first tweet — “just setting up my twttr” — and sold for $2.9 million in March 2021.

These are just a few examples of the wide range of NFTs that exist, from digital art to virtual real estate to unique social media moments. NFTs have created a whole new world of digital ownership and collecting; some sell for unbelievable prices.

What Is an NFT in Simple Terms?

Simply put, an NFT, or Non-Fungible Token, is a one-of-a-kind digital asset that’s verified on a blockchain to make sure it’s authentic. This grants authenticity to buyers and sellers alike. Creators use NFTs to sell their digital creations as unique items, and buyers use them so they can own unique digital assets.

How Does an NFT Make Money?

There is a definite financial opportunity with NFTs. Like any piece of art, an NFT can earn money by being sold for a higher price than which it was purchased. Creators can also earn royalties on future sales of their NFT as a source of passive income, and buyers can profit from the object’s value appreciating.

Why Do People Buy NFTs?

People buy NFTs for many of the same reasons they buy works of physical art: to own something unique, to support creators they appreciate, to earn money on future sales, or simply to enjoy the art.

What Is the Most Expensive NFT Ever Sold?

The most expensive NFT ever sold is “Everydays: The First 5000 Days” by the digital artist Beeple, which sold for $69 million in March 2021 at a Christie’s auction.

Can I Take a Screenshot of an NFT?

Yes, you can take a screenshot of an NFT — however, that doesn’t give you ownership of the original NFT. Because the blockchain logs all transactions related to NFTs, ownership is recorded, and the record can’t be tampered with. Only the owner of the NFT has true ownership and control over the digital asset.

Can You Sue Someone for Using Your NFT?

Just like any other form of intellectual property, you can sue someone for using your NFT without your permission. NFTs are considered digital assets, and their ownership is verified on a blockchain, which can serve as evidence in legal proceedings.

How Do People Invest in NFTs?

You can invest in NFTs by purchasing them on various blockchain platforms, through NFT marketplaces, or at NFT auctions. Investors may want to speculate on the future value of NFTs and trade them like other assets. They are held in digital wallets, just like cryptocurrency.

Is Using NFTs Illegal?

Using NFTs is not illegal. However, like any digital asset, NFTs can be used for illegal purposes, such as money laundering or fraud, so it’s important to use them responsibly.

Can Anyone Create an NFT?

Anyone can create an NFT so long as they have a digital asset to sell and access to a blockchain platform that supports NFTs. There are many NFT marketplaces and platforms that allow creators to mint, list, and sell their NFTs.

For more information on the world of finance — including all the newest milestones like NFTs — check out Urban Income.