NFTs have been cropping up more and more in society as unique digital items that collectors buy for millions of dollars. But what are NFTs, and what do they mean for people looking to invest? Do they accrue wealth and value over time, or will they depreciate as the NFT loses meaning in the ever-evolving digital society?
Non-Fungible Tokens (or NFTs as they are more commonly known) are essentially a unique digital item that people pay to own (which can amount to millions of dollars) and keep track of this ownership through a “blockchain”. Technically an NFT can either be one-of-a-kind, like a physical painting, or one copy of many (like trading cards) where the blockchain denotes who owns the original file.
At a very high level, NFTs are part of the Ethereum blockchain, a cryptocurrency who’s blockchain supports NFTs by storing extra information that makes NFTs work differently from the cryptocurrency.
An NFT can be anything digital (such as gifs, videos, music and memes) but is primarily used to sell digital art. An example of an NFT recently sold is the first tweet by Twitter founder Jack Dorsey, which went for nearly $3 million.
Just as a real-life Picasso has an inherent value that increases or decreases over time, NFTs can be treated as a speculative asset after which you can buy it and hope that the NFT’s value increases over time. At this point, it’s hard to tell if there are projected trends of value for NFTs as the value lies within the NFT’s perceived value and not a set purchase price.