A Short Guide on NFTs
Can’t get your head around NFTs? We’re here to help
What is an NFT?
NFT stands for non-fungible token, what that means is that it is one-of-a-kind. Unlike a bitcoin which can be traded for another bitcoin, leaving you with the exact same thing. If something is non-fungible it means that even if you exchanged or traded it you would have something completely different as a result. Think of it as a sort of one-off trading card.
How do NFT’s work?
Most NFT’s are part of the Ethereum blockchain, which is a type of cryptocurrency akin to bitcoin, the difference is that NFT’s in the Ethereum blockchain store additional information which makes them work differently to other coins.
What is a blockchain?
A block chain is an ever increasing list of records named “blocks”, using cryptography they are linked together. The reason it’s a chain is because each block holds information about the previous block’s cryptographic hash as well as its own timestamp and transaction data. This makes retroactively modifying the data in any given block extremely difficult without altering every subsequent block, therefore the longer the blockchain, the more secure the data becomes.
What are NFT’s for?
The main hype surrounding NFT’s is its application in the world of digital art sales. An NFT can be anything digital, from pictures, meme’s and songs, to tweets. Think of it like a kind of unique digital collectible.
Is it worth investing in?
Here’s the catch, although a person can buy an NFT and in some cases pay a lot of money for it, the digital file which the NFT gives ownership for can still be copied by others as many times as they want. The NFT itself is unique and only the buyer can prove ownership of a file but they don’t gain the copyright. It’s much the same as buying an original Van Gogh, other people can still get a print, or reproduction of it. The difference is with an original painting you have the physical copy and can touch, smell and generally appreciate it, with digital content a copy is for all intents and purposes the same as the original.
So really the main reason to invest in an NFT is to financially support the creator.
Will NFT’s rise in value?
This is the question that all interested parties are speculating: will the value of an NFT purchased today be worth more in the future? Is it going to be the digital equivalent of collecting Art, Antiques? It’s honestly anyone’s guess at this point in time.