Non-fungible tokens, or NFTs, are the most talked-about topic right now. You may have heard about a Nyan Cat GIF being sold for 300 ETH, which was around $590,000 USD at the time it was being sold for, or about Twitter CEO Jack Dorsey’s very first tweet being sold for 1,630.58 ETH, which was about $2.9 million USD at the time according to the news. The digital collage “BeepleJPEG” file was also recently auctioned for $69 million USD, adding more to the NFT buzz.
What precisely are NFTs, and why are most people willing to spend so much money on them?
NFTs are one-of-a-kind tokens that cannot be exchanged for anything else. For example, 1 BTC can be exchanged for another BTC with the same value, indicating that it is fungible. Non-fungible items are one-of-a-kind works of art or painting that cannot be replaced. Non-fungible means that there is only original portrait of that certain painting in the world, and all others are just images, recreations, or prints of it. Those items are represented by non-fungible tokens.
Most NFTs are, at a high level, part of the blockchain of Ethereum. Similar to Bitcoin and Dogecoin, Etherueum is the most widely used cryptocurrency platform with a blockchain that not only allows NFTs, but also behaves in a way people can store additional information that treats differently from an ETH coin. It is worth mentioning that various blockchains can use NFTs in their own ways. NFTs are digital assets in which consumers purchase ownership of a single, unique digital asset. They are also a type of cryptocurrency asset, wherein each token being one-of-a-kind. Currently, Ethereum is the most popular blockchain service for buying, selling, and trading NFTs, but other blockchains are gaining popularity as well.