Some are selling for millions. The hype of and the interest in the NFT market is definitely there — with $250 million in sales in 2020 alone. 2021 is proving even hotter with sales up 55% since 2020, from $250 million to $389 million.
That being said, what exactly is an NFT?
NFT stands for non-fungible token. Okay, great — but what does that mean?
Non-fungible means that it is unique and cannot be exchanged for something else of equal value. A $20 bill can be exchanged for four $5 bills — meaning that it is fungible. An NFT is one-of-a-kind as the token is attached to a single digital asset making it non-fungible.
NFTs are recorded in a digital ledger in the same way as cryptocurrency. This means that a listing of who owns each NFT exists.
Overall, the large majority of NFTs are on the Ethereum blockchain. Ethereum is a type of cryptocurrency; however, its blockchain can additionally support NFTs. Since the technology for NFTs emerged in 2015 on the Ethereum blockchain, a few other blockchains have deployed their own versions of NFTs.
The boom of NFTs has been amazing and beneficial for digital artists. The wild success of NFTs has led to a large number of people putting their digital art up for sale as NFTs opening up a new avenue for revenue for artists.
It’s not just about art though. NFTs can be tied to any digital asset, so there is no limit, really, to what an NFT can be. Examples include:
· Music
· Collectibles
· Tokenized real-world assets such as real estate or cars
· Memes
· Videos of iconic moments in sports
A number of NFTs are going for very large price tags (millions); more and more are being sold as this trend rises in 2021. So, who exactly is buying NFTs? Buyers often have a strong tech understanding and likely have been highly successful in the past year with cryptocurrencies.
Some more out-of-the-box, wilder or high-dollar NFT sales have included:
· A Tweet: The Co-Founder and CEO of Twitter Jack Dorsey turned his first tweet from 2006, “Just setting up my twttr,” into an NFT that sold for the high sum of $2.9 million. Dorsey has stated that the proceeds will be flipped into Bitcoin and donated to GiveDirectly which is a charity that assists in COVID-19 relief for six African countries.
· A Cat: Former YouTube sensation Nyan Cat, a video of the pixelated cat boasting a Pop-Tart torso overlaid with a Japanese pop song, was turned into an NFT. The infamous cat gif with over 185 million views on YouTube sold for 300 Ethereum — $531,000 — as an NFT.
· Farts: During the COVID-19 lockdown, Brooklyn filmmaker Alex Ramirez-Mallis and four of his buddies started the interesting habit of sending recordings in audio of their farts to each other. Ramirez-Mallis turned 52 minutes of farts into an NFT. Someone actually purchased this for 0.24 Ethereum — $420.
· Burning Banksy: A group of crypto-savvy artists took a Banksy piece and burned it in a park. The video of this was turned into an NFT. It sold for NFT 228.69 ETH, a $380,000 equivalent. Original purchase price for the artwork is rumored to have been around $100,000.
Feeling creative? You can create your own NFTs. Click here for a guide on how.
Be on the lookout monthly for more information on cryptocurrency in our Intro to Crypto: A series.
