Non-fungible tokens, commonly referred to as NFTs, have become a hot topic for debate across all major news networks. Following a number of highly publicized sales of these digital assets by prominent celebrities, the general public has had no choice but to sit up and take notice. But what are NFTs and how do they work? Why have they captured the world’s attention?
NFTs explained
Essentially, NFTs are certifiable identifiers of ownership for unique digital assets, such as photos, video and audio files. Unlike online casino games, they provide no interactive entertainment and are used purely to verify the owner of the creative work in question. Proof of ownership for said digital assets is created using blockchain technology.
So, what are NFTs used for? Because they are tokens signifying ownership of unique artwork, music and other creative products, they hold value and can be bought and sold. The idea behind this is that the goods themselves can’t be remade easily, giving them unique value in their respective markets.
As a quick side note, fungibility refers to replaceable goods, whereas non-fungibility means that a product cannot be replicated. In other words, non-fungible tokens, or NFTs, can only be used for one-of-a-kind virtual assets. As a basic example, let’s say you and a friend have purchased tickets for a live music concert. If it’s for the same concert, then both tickets hold the same value, meaning they are “fungible” tickets. On the other hand, if your ticket is for a concert headed by famous musicians, and your friend’s ticket is for one that only involves lesser-known artists, the tickets have different values and therefore become non-fungible.
This relatively new form of digital ownership relies on the acceptance of NFTs as a standard form of trade, and here’s where the crux of the matter presents itself. The legal side of NFT ownership is a bit of a gray area, as technically, there are no copyright or intellectual property rights given to the owner of an NFT. What’s more, an NFT doesn’t prohibit sharing or copying of the asset, nor does it prevent the creation of assets that use the same reference files.
What all this means is that, even though NFTs can be a lucrative pursuit down the line, there’s no way to know what the future holds in terms of legislation and regulation. Only time will tell whether or not the future of casino payments, for instance, has a widely accepted place for NFTs, cryptocurrencies and other blockchain-based technologies.
How to buy NFTs
The most popular NFTs have grown in fame due to two factors: celebrity involvement and an astonishing amount of money being exchanged. Purchasing any of these tokens is a risky investment at this point in time, but that hasn’t stopped celebrities such as Logan Paul, Paris Hilton and even Donald Trump from trying to get in on the action. And what are the driving forces for these multimillion-dollar purchases? Investment and bragging rights, of course, despite the fact that NFTs are far from established.
Getting in early in the hopes of capitalizing on a fresh market is the only verifiable reason for buying an NFT. Owning a slice of virtual real estate is a contentious issue that won’t be resolved overnight, which means that we’re yet to see the end result of millions of dollars being pumped into NFTs.
NFTs grow in number by the day, but it’s worth repeating that possession of online assets is a system that’s still in its infancy and a lot can change in the future. In the same way that you take risks and flirt with loss during online poker tournaments, there’s no guarantee that you’re going to walk away with a profitable NFT once the proverbial cards hit the table.
In theory, there’s a reduced risk for buyers as blockchain verification is incorruptible, but it’s not unheard of for digital artwork to be stolen, either. There’s also the issue of money laundering, which has long been suspected as a key driver for NFT popularity. All this to say, NFTs clearly represent a new and unvetted frontier in digital asset management.
If none of the points we’ve mentioned have dissuaded you, NFT marketplaces are your best bet when looking to buy NFTs. Each marketplace specializes in a wide range of NFTs, offering everything from art and music to poker and memorable sporting moments. Keep in mind that there’s no need to study anything if you want to learn how to make NFTs, so you constantly have to be on the lookout for fraudsters and crooks.
On the bright side, one of the major benefits of NFTs is the lack of physical components. Your ownership lies in a blockchain verified by a decentralized network of computers, so there’s no need for a physical certificate or license of any kind. You’re also entering a market earlier than most people, but there’s no guarantee it will work out.
It’s probably best to avoid the volatility of NFTs until the world finds common ground from a legal standpoint. However, if you consider yourself a risk-taker and you want to get in on the action sooner rather than later, it’s worth knowing that NFTs do possess the potential to become worthwhile investments.
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