Non-Fungible Tokens (NFT) are the new cool investment options. From time to time, asset classes and investment options keep increasing. The moment something new comes into this investment world, it usually takes a boom. For example – during the last decade of the 1900s, stocks and bonds took a boom. The period of 2010-2018 saw the boom of cryptocurrency and other digital assets.
Now, in 2021, the NFTs are on a roll. Solving the long-sought problem of not having a purely digital asset investing option, NFTs are here to stay for at least a decade. Amongst all this chaos and hoorays, people wonder if the hype of NFT is legit. What is creates a bubble, and one random day bursts shattering all hopes? Well, let us find out.
n NFT (Non-Fungible Token) is a crypto-based digital asset that investors are buying in exchange for cryptocurrency. The exchange is done majorly in the crypto, Ethereum. This digital asset includes some of the real-world objects and are exchanged by handing out a token. The token represents the originality and ownership of the asset.
Let me explain it to you with an example – The digital asset I am talking about can represent things like art, some form of music, game items, etc. Say I created a digital art and sold it as an NFT. The person who buys it gets the token as proof of ownership of that art. I, in exchange for the art, get compensated in cryptocurrency.
Like crypto-currency, NFTs are also secured with encoding. The form of encoding used in NFTs and Cryptos is almost the same. Although the NFT came around 2014, it took seven years for people to notice it. Since the November of 2017, a whopping $174 million worth of business has been done in NFTs.
Most of the NFTs are bought and sold with Ethereum cryptocurrency. This is because the majority of NFTs are like a part of a Blockchain system like Ethereum. One can say that the Ethereum blockchain itself supports NFTs.
This has majorly increased the market capitalization and popularity of ETH (Ethereum) coins. Rich celebrities, investors, normal people, everyone can be involved in NFTs, and anything can be bought and sold. You can sell and buy Instagram posts, some tweets, digital art, collectibles, anything. Literally anything!
You won’t believe that the Founder of Twitter, Jack Dorsey, sold a tweet for $3 million! However, the NFTs are more inclined towards digital arts. Say it is a way to boost art appreciation or maybe build a collection of digital art.
We have seen rich people buy paintings and art to hang on their walls. The same is with Art NFTs but only digital.
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