NFTs seem to be the new rave – you know, everyone’s talking about them, everyone’s trying to get a foot in. Even if you, by chance, are not feeling the familiar tinge of F.O.M.O, you cannot deny that there hasn’t been anything everyone seems to simultaneously deem cool since the music releases of summer 2016.
This article will shine a light on why NFTs are so popular in today’s world.
First things first, what are NFTs?
NFT is an acronym for the words Non-Fungible Token. “Non-fungible” means that one NFT cannot be interchanged or substituted with another because they do not all have the same value like the cryptocurrency, bitcoin, for example.
NFTs as seen in popular media appear to be only art by digital artists, these however are not the only things that can be minted and bought. Ownership of other things of value such as; original recipes, music albums, etc are examples of other ways you can use NFTs.
How do NFTs work?
If you read our article on cryptocurrency, you’ll definitely have an idea of how the blockchain works. NFTs, like cryptocurrency, use the blockchain system. Specifically, they’re part of the Ethereum (a type of cryptocurrency) blockchain, only it works slightly differently – nothing too serious to work yourself over; it’s just how the information is stored.
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Understood, but why are they so popular then?
Before we dissect why they are the new rave, here’s a little trivia for you:
The NFT explosion of 2021 would make it seem as though it started then, but it didn’t. The first NFT ever produced was in May 2014 by Kevin Mccoy and Anil Dash; which was before the Ethereum blockchain existed.
It was called ‘Quantum’ and it was a pixelated video image of an octagon made by Kevin Mccoy’s wife, Jennifer. Quantum was sold to Anil Dash for $4. The term NFT hadn’t yet been coined; so, the technology used in minting that piece of art was called “monetized graphics”. Today, Quantum is worth millions of dollars.
The term NFT didn’t gain popularity until 2017 and there has only been more and more public awareness since then.
Back to the topic at hand…
Like any reasonable person, you’re likely to wonder why they cost so much, the reason isn’t far off. To understand why NFTs are seemingly so expensive, you have to understand that just like any collectable item such as original renaissance paintings, the value is less in the item itself than it is in the scarcity of that item. It’s in the fact that as an NFT owner, you have access to something nobody else can have.
Therefore, it would not be amiss to suspect or even suggest that just as with many investment fads, NFT ownership carries the speculation of a promise to make rich. This is because these items can be flipped at an even higher monetary value than their initial cost.
With the classic marketing strategy of endorsements from well-known people or celebrities such as Tesla’s Elon Musk, media personality, Jimmy Fallon, and even athletes such as Neymar and Stephen Curry, it’s little wonder that more people are eager to buy into the hype.
Whatever the case, anything you would consider worth investing in must have gone through due process of thorough research, and this is no different regardless of how popular it appears to be.
However, you can look forward to our newsletter where we will be sure to explain further in very simple terms, how NFTs are generated and how they work.