A blockchain is a distributed network that keeps immutable records. Content creators who mint an NFT attach it to a file on the blockchain, and then buyers can buy or sell it, just like they would any other piece of digital content. NFTs can be attached to almost any kind of intellectual property, but the most well-publicized examples have been in art and music. Musicians have used NFTs to release their albums, and visual artists have created NFTs of their paintings and videos. Traditional collectibles like trading cards have also found a new outlet in NFTs, with sports leagues and individual players creating online collections that commemorate their most notable achievements.
NFTs are typically traded in the cryptocurrency that powers the blockchain that they’re minted on, or in other cryptocurrencies such as Ethereum. When you’re ready to purchase one, you can find a marketplace that accepts your preferred method of payment, then submit the file or other asset you wish to associate with it. Once the transaction is completed, you will have an NFT in your digital wallet that you can trade or sell at any time.
Some NFTs are sold as digital representations of physical objects, like artwork or music recordings. Others are built around communities. A popular example is Bored Ape Yacht Club, whose NFTs can be purchased to gain access to a members-only Discord chat and exclusive merchandise, as well as virtual meetups. Some even give the holder a voting role in the project’s future.
While some people are using NFTs as investments, they should be approached with a similar amount of caution to any other investment. It’s important to research a creator before you invest, and keep in mind that there are scammers operating in this fast-growing space. DeVore recommends looking for verified accounts, and comparing prices to other marketplaces to see how reasonable a creator’s NFTs are.
Despite their skepticism, some experts believe that NFTs could help to decentralize the existing internet. Currently, most media makers (artists, musicians, video game streamers) sell their work through big-name platforms such as Spotify and YouTube, which take a large cut of each sale. Some creators say that NFTs will allow them to sell directly to fans, keeping more of the money themselves.
While you can use NFTs to purchase other pieces of digital art, music and videos, they’re more commonly bought for their cultural significance. For instance, some of the most popular NFTs have been representations of classic memes like Nyan Cat and Bad Luck Brian, while others have been built around famous real-life events or moments in pop culture. For example, Twitter founder Jack Dorsey’s first tweet and Tim Berners-Lee’s original source code for the world wide web have been turned into NFTs that can be purchased and redeemed for goods and services. NFTs have also been created to memorialize iconic pop culture moments, like the ALS Ice Bucket Challenge. A popular NFT version of the viral challenge has already raised more than $4.7 million for charity.