HomeTECHNOLOGYWhat Is An NFT - And Why Is Everyone Talking About It?

What Is An NFT – And Why Is Everyone Talking About It?

The term NFT has received much attention in the past few weeks. We look at what NFTs are and why everyone is suddenly talking about them. Sports, gaming, cryptocurrencies, and even art: the term “NFT” is suddenly popping up everywhere. Some call the hype “hysterical,” others see it as the future of the financial world. But what is an NFT, and why is everyone talking about it at the moment?

An NFT Is Unique

NFT stands for non-fungible tokens. Translated, this roughly means a non-replaceable certificate. When something is “fungible,” it can be exchanged or replaced with something with the same value. Goods “fungible” can be cash, gold, bitcoins, or airline miles. In all cases, these things can be exchanged for an equivalent.

For example, if you have a ten-euro note and someone gives you two five-euro bills in exchange, you accept the exchange. Because even if the five-euro notes look different, they have the same value.

Accordingly, non-fungible means that a certain good cannot simply be exchanged. It has certain properties that make it unique. These can be physical objects such as a painting, concert tickets, or a car. But it can also be virtual things, such as a trademark, digital game pieces, or digital works of art.

Example Concert Tickets: These allow you to enter a specific band on a specific day. You can’t just go to a concert a day later with the tickets or see any other band.

NFTs work in the same way. No NFT is like another. The information contained in the NFT is both verifiable and unique. Therefore, the original issuer can always be traced back, which makes counterfeiting extremely difficult, unlike with physical valuables. NFTs can therefore not be exchanged directly. They are also neither destructible nor divisible into smaller units.

NFT And Blockchain

NFTs are called non-fungible tokens because the “token” in this case refers to the tokens that are known from the field of cryptocurrencies. In the context of non-fungible tokens, “token” refers to a digital certificate that is stored on a secure digital platform – the blockchain.

In summary, NFTs are digital assets, publicly verifiable intellectual goods secured via blockchain. Platforms like Ethereum have established their NFT ecosystem based on their blockchain. Other blockchains are slowly following suit. You can find and purchase numerous NFTs on the Open Sea platform. NFTs are virtual properties, virtual objects that can be bought for online computer games, digital collectibles, and digital sneakers or cars.

Interested parties purchase NFTs via cryptocurrencies. Usually, it is ether, the cryptocurrency of the blockchain platform Ethereum.

Why Are NFTs Important?

NFTs have enabled an entirely new form of online trading and revolutionized the world of digital art, collectors, and gaming. The Nonfungible.com website is the largest data collector in the NFT space. According to its latest annual report, NFT’s market cap in 2020 was over $ 380 million. The year before, it was just under $ 141 million.

The Value Of NFTs

The value of an NFT is determined by supply and demand. Collector’s value and rarity play a role here. NFTs are rare, and users are willing to pay a lot of money for them. NFT owners can earn money with it.

In the virtual game “Decentraland,” a gamer bought 64 different plots of land and then combined them into one large property. It is now called “The Secrets of Satoshi’s Tea Garden” and ended up being sold for $ 80,000 due to its attractive location.

The Most Expensive NFTs

The currently most expensive NFTs include:

  • People’s digital artwork “Everyday: The First 5000 Days” ($ 69.3 million)
  • A virtual lot from the Axie Infinity game ($ 1.5 million).
  • The CryptoPunk # 6965 is currently worth the ether equivalent of $ 1.2 million.
  • The crypto kitty “Dragon” is currently worth around 917,000 US dollars.
  • The 1-1-1 race car is worth around $ 635,000 right now.
  • Someone for $ 590,000 bought the Nyan Cat meme.
  • Digital NBA trading cards from top basketball player LeBron James sold for the equivalent of $ 100,000.

Disclaimer: The market is moving so fast now that the list is probably already out of date by the time you are reading this.

From Nihe Product To Mainstream

What started as a digital niche product in the gaming community has now landed in the mainstream. In the art world, in particular, NFTs are currently hot.

The traditional British auction house “Christie’s” is currently auctioning the digital work of art “Everdays: The First 5000 Days” by the artist Beeple until March 11, 2021. An NFT guarantees the authenticity of the work of art. Christie’s also accepts the cryptocurrency ether as a means of payment.

The starting bid started at $ 100. The current highest bid is currently already at 3.5 million US dollars. But there is also criticism of NFTs. Memo Akten, a British AI artist, has criticized the disproportionate environmental costs of trading NFTs. A single NFT transaction is equivalent to 47 kilograms of CO2.

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