Updated: Jun 14, 2021
A non-fungible token. What is that? What does that mean? Non-fungible tokens, also known as NFTs, are unique units of data that are stored in blockchains, which are digital holders (websites) that ultimately certify the uniqueness of a certain NFT. The blockchain that stores these non-fungible tokens is currently representing types of cryptocurrency like Ethereum or Bitcoin. What makes NFTs any different than crypto? Unlike Bitcoin, NFTs are irreplaceable and one of a kind, making them extremely valuable. In simple terms, NFTs are like digital sports cards.
Along with the exclusiveness that these assets hold, they have the ability to attract customers because of their intriguing speciality. NFTs have the capability to be anything; they can be in the form of music, sports, drawings, and more. As a result of the creativity it presents, many people are drawn to the idea, and they invest money in certain arts that interest them. Since people can now digitally sell certain art forms, this concept has and will ultimately change the way people invest and look into the market.
Currently, one NFT that is blowing up the market is NBA Top Shot. It enables fans from across the world to trade, sell, and buy “officially-licensed video highlights.” This means that you can “own” a certain NBA highlight as it presents a verified check mark in the top right corner of each video. This verified check mark is crucial to the overall success of NBA Top Shot — it confirms that a video has only one rightful owner. This is extremely different from the blockchain that the internet maintains, where anyone can be the owner of a random picture or video. Although these highlights may seem useless, many people around the world ultimately value ownership of unique items, even if they technically hold no real world value. No matter the scenario, irreplaceability will always attract a huge market. Another incentive that the “flow blockchain” (NBA Top Shot’s database) carries is that people now have the ability to invest in the future. This part is extremely similar to how stocks and trading cards work: if you think a stock will do well, you put money into it. In NBA Top Shot, if you believe players will soon do well, you can buy one of their highlights and sell it once they hit peak performance.
Although some people may think NFTs are purposeless, there are some investors who certainly think the opposite. Some of the most expensive NFTs can sell for upwards of $100 million. One buyer by the name of Vignesh Sundaresan bought a piece of artwork for $69 million. Another investor bought a picture of the first Twitter tweet for $2.9 million. Every day, more and more people are looking into NFTs: investing part of their salary into a highlight or maybe even starting their own NFT. NFTs have the potential to take over the market whether you’re here for it or not.