A nft, or non-fungible token, is a digital representation of an internet-based collectible that’s created using blockchain technology (which also underpins cryptocurrency). It is unique and can only be owned by one person at a time. NFTs are a great example of the potential for blockchain to transform the way we exchange and value things.
NFTs began in the art world, but you can now buy them for music, sports highlights, video games, fashion, trading cards, virtual world avatar wearables, event tickets and even domain names. They’re also popular for social media and pop culture-related content, like Twitter co-founder Jack Dorsey’s first tweet, which was sold as an NFT for $2.9 million in 2021.
The key benefit of NFTs is that they allow creators to monetize their content in ways that wouldn’t be possible with traditional channels. For instance, an artist can mint NFTs of their paintings to sell them directly to fans, bypassing the need for agents and allowing them to keep more of the money they make. Artists can also program in royalties, so that every time an NFT is resold to a new owner, the artist gets a cut of the proceeds.
In addition to the monetary benefits, many NFT projects have built vibrant communities around them. The wildly popular Bored Ape Yacht Club, for example, gives its collectors access to a members-only Discord chat, exclusive merchandise and votes in the project’s future, plus NFT-based avatars to use as their profile pictures on Twitter and other platforms. It’s a big reason that many people find NFT collecting addictive.
It’s worth noting that while NFTs represent an item on the blockchain, ownership of an NFT doesn’t give you any rights to that content. This is a little bit like owning a trading card, where you own the card’s representation but not the rights to the artwork or design that appears on it.
For the most part, NFTs are traded on marketplaces that require you to hold a specific crypto currency – often ETH – to trade. This means you’ll need to open an account on a crypto exchange, purchase some ETH and transfer it to the wallet you want to use to buy NFTs. Different exchanges offer a range of services, and it’s important to research them thoroughly to determine which ones best suit your needs.
NFTs are a relatively new phenomenon, and some marketplaces may be scamming unsuspecting buyers by selling illegitimate content. This can devalue legitimate NFTs and even put the buyer at risk of legal action from the copyright holder, so always be sure to trade with reputable sellers. In addition, it’s a good idea to stick with marketplaces that are verified by an independent third party to ensure the legitimacy of all items being sold. This will also help you avoid scams and phishing attempts. You can do this by searching for the “verified” tag on a marketplace’s home page. This tag will usually include a logo that links to a website that confirms the authenticity of a marketplace’s verification process.