Understanding NFTs (Digital Art)

  • What are NFTs?
  • Why are they worth millions of dollars?
  • What Qualifies to be an NFT.

The first-ever NFT artwork, being a collage of images by digital artist Beeple was sold at Christie’s auction house for an unbelievable $69.3 million but what is an NFT and what makes them so valuable?.

NFT is an abbreviation of nun-fungible token and is a piece of digital content linked to the blockchain. Fungible means something that can be substituted for something of equal value for example Gold is fungible, the metal is so similar that if I get 500grams of pure gold in Europe or Africa, one is as good as the other.

So when something is said to be non-fungible, it means that it’s unique and can’t be replaced with something else that is identical and is of equal value.

Most NFTs are part of the Ethereum blockchain which is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently
from, an ETH coin.

A good example of an NFT is Twitter founder Jack Dorsey’s first-ever tweet that was sold for an equivalent of $2.9 million in cryptocurrency. The buyer according to BBC received a certificate, digitally signed and verified by Mr Dorsey as well as the metadata of the original tweet, the data will include information such as the time the tweet was posted and its contents.

Will the tweet be taken down from Dorsey’s Twitter account?

No, the post will remain publicly available but NFTs are designed to give you something that can’t be copied such as ownership of the work. Just like with physical artwork anyone can buy Leonardo Da Vinci Mona Lisa painting as a copy but only one person can own the original.

Why would someone buy a tweet that we can all see for that much?

Think of the buyer as an extremely devoted fan(Stan) of Jack Dorsey who will do anything to get to own a piece of their favourite stars and feel closer to them. So yes, an influencer or celebrities can create their NFT and sell it as long as someone is willing to pay for it.

Apart from being able to post the image online or set it as your profile picture and bragging rights that you own the art, NFTs can work like any other speculative asset, where you buy it and hope that the value of it goes up one day, so you can sell it for a profit. Some people treat them like they’re the future of fine art collecting

NFTs were also created by crypto millionaires and billionaires as a way to diversify their crypto holdings. Instead of having millions of crypto, they can buy NFTs of the same value.

What Qualifies to be an NFT.

Anything digital (gifs, pictures, video, texts, sound clips, video game skins and more) can be NFT, like the NFT video clips sold by Paul Logan that sold for up to $20000, note that you can always see the full video together with the NFT on youtube