NFT or Non-fungible tokens have been hot in the news lately, and you’re likely interested in finding out more. You may even want to know if this is something you could make money from because you’re heard it’s blockchain technology, just like Bitcoin.
Whether you’ve seen the news or not, be aware that NFTs are being created and then sold for huge amounts of money. In some cases, they are sold for 1 million USD each, and the highest so far has sold for 70 million USD. So there is big money in trading NFTs right now.
What is NFT?
An NFT is a unique digital asset that can’t be replaced. More often than not, NFTs are unique digital artworks sold between artists, collectors, and investors. Because NFTs provide two different types of interest, the art side, and the money side, your market has the potential to be larger than, just say, cryptocurrency investors.
What is Non-Fungible vs. Fungible?
Non-fungible means that your asset is unique. It’s a cryptographically signed piece of artwork that, while it could be used or seen by other people, can’t be owned by more than one person. So if you sell it and buy another NFT, you will have a completely different asset.
An example of a fungible asset would be Bitcoin. You can buy a Bitcoin, sell it, buy a new one that is exactly the same. So there is no real difference between the bitcoins you own; they’re interchangeable and have the same value no matter which one you own.
How Do NFTs Work?
NFTs work in a similar way as cryptocurrency coins. Most NFTs on the market right now are using the Ethereum blockchain. Ethereum has implemented some new features that allow these unique digital assets to be stored in their blockchain as a separate entity to ETH coins.
Ethereum is a similar cryptocurrency as Bitcoin, just now as well known to people outside of the industry. However, any blockchain has the potential to implement NFTs and start selling them. So be aware of where your NFT is being stored, as this may impact its security and reliability.
What Exactly Is Being Sold As NFTs?
An NFT can be anything and sold by anybody. Some examples are, of course, digital drawings that are most common right now. The hope from many is that the art world moves to a digital format using NFTs to resell them. Though if you’re really an art lover, you’ll need to print it out to display it somewhere physically. But at least you have authority over the artwork. It would be difficult to steal and then resell an NFT as it would ultimately be traceable through the blockchain.
You also have singers or actors selling videos, digital music, and even digital assets in video games. Anything unique could be sold as an NFT. However, the price is often determined by how famous you are or if there is anything special about your item.
If I were to create a nice drawing of a fruit bowl, there would likely be nobody wanting to buy it. So there is still some sense in what people are buying and not just buying things for the sake of having them as an NFT.
How Do You Stop People From Copying Your NFT?
In general, you can’t stop people from copying your NFT. The point of the NFT is that you own it and can resell it. Anybody else can view it, copy it, and to some degree use it. It’s the same with any kind of artwork, one person owns the original, and other people may have duplicates displayed on their walls that don’t have the same resale value.
If somebody is using your NFT to make money, you or the copyright holder would need to take legal action as with anything you own. For example, anybody can copy a Marvel character, print it on a t-shirt, and start selling it. It’s up to Disney, who owns Marvel, to take legal action to stop them.
What Is The Point Of An NFT?
The point of an NFT depends on who you are and what your goal is, but if we’re being realistic, it all comes to money.
Artists
NFT is an opportunity for artists to sell their digital work to a broader audience who are not only interested in the art but also as an investment to resell. The more you can sell, the higher your profile will become and the more money your NFTs will bring you.
It’s simply another avenue for you to promote yourself in a digital world filled with many artists. You also have the option to take a percentage of the sale of your art each time it’s sold. So the more popular you get and the more your art changes hands, the more residual income you earn.
Cryptocurrency Enthusiasts and Investors
NFT is another option for cryptocurrency enthusiasts and investors to get in early. You spread yourself across all kinds of different coins and technologies. This is the next step and potentially the next evolution of cryptocurrency. It’s also a relatively new technology that is gaining traction.
When you look at something like Bitcoin, you can’t get in on the ground floor anymore. Many new coins are not backed by anything and are a gamble rather than an investment. With NFTs, you have an actual item that you can resell, which won’t disappear overnight.
What’s The Downside of NFT?
If you buy a one-of-a-kind NFT, it’s possible that the artist could release more copies that are either the same or just very similar in the future. This is especially true if the artist keeps the copyright and distribution rights. So it’s essential to know precisely what you’re buying with NFT. Are you just buying the art, or are you buying the entire thing, the art, the copyright, and the distribution rights?
If you’re buying something linked to a celebrity, such as a video or music, you could see your NFT go up or down in price based on that celebrity. So if they fall out of favor or stop working, then maybe your investment will go way down.
Final Thoughts
NFT has the potential to be a huge market and give you the ability to make a lot of money as either an artist or an investor. As an investor, you need to research what you’re buying, especially if you don’t plan to flip your NFT quickly.
Make sure you completely understand what you’re buying, who or what it’s linked to, and what your rights are with the NFT. We are seeing a lot of strange NFT purchases with celebrities jumping on the bandwagon to make a quick buck. But will these celebrities be around long enough to make your investment worthwhile is what you need to ask yourself.
