What are NFTs and why are some value millions?

A digital-only artwork has sold at Christie’s auction house for an eye-watering $69m (£50m) – but the winning bidder will not receive a sculpture, painting or perhaps a print.

Instead, they get a unique digital token known as an NFT.

Where Bitcoin was hailed because the digital answer to currency, NFTs at the moment are being touted because the digital answer to gatherables.

But there are plenty of sceptics who think it is all a bubble that’s going to burst.

What’s an NFT?

NFT stands for non-fungible token.

In economics, a fungible asset is something with units that can be readily interchanged – like money.

With cash, you can swap a £10 note for two £5 notes and it will have the same value.

However, if something is non-fungible, this is unimaginable – it means it has unique properties so it cannot be interchanged with something else.

It could possibly be a house, or a painting such because the Mona Lisa, which is considered one of a kind. You may take a photo of the painting or purchase a print but there will only ever be the one unique painting.

NFTs are „one-of-a-kind” assets within the digital world that can be purchased and sold like another piece of property, however they haven’t any tangible form of their own.

The digital tokens can be considered certificates of ownership for virtual or physical assets.

How do NFTs work?

Traditional works of artwork comparable to paintings are valuable because they’re one in all a kind.

But digital files might be easily and endlessly duplicated.

With NFTs, artworkwork might be „tokenised” to create a digital certificate of ownership that may be purchased and sold.

As with crypto-currency, a file of who owns what’s stored on a shared ledger known as the blockchain.

The records cannot be cast because the ledger is maintained by 1000’s of computers across the world.

NFTs also can include smart contracts that will give the artist, for example, a reduce of any future sale of the token.

What’s stopping folks copying the digital artwork?

Nothing. Millions of people have seen Beeple’s art that sold for $69m and the image has been copied and shared countless times.

In lots of cases, the artist even retains the copyright ownership of their work, so they can proceed to produce and sell copies.

However the purchaser of the NFT owns a „token” that proves they own the „authentic” work.

Some individuals compare it to buying an autographed print.

People are paying millions of dollars for tokens?

Yes. It is as wild as it sounds.

How a lot are NFTs worth?

In theory, anybody can tokenise their work to sell as an NFT but interest has been fuelled by current headlines of multi-million-dollar sales.

On 19 February, an animated Gif of Nyan Cat – a 2011 meme of a flying pop-tart cat – sold for more than $500,000.

A few weeks later, musician Grimes sold a few of her digital art for more than $6m.

It is not just artwork that is tokenised and sold. Twitter’s founder Jack Dorsey has promoted an NFT of the primary-ever tweet, with bids hitting $2.5m.

Christie’s sale of an NFT by digital artist Beeple for $69m (£50m) set a new record for digital art.

But as with crypto-currencies, there are considerations concerning the environmental impact of sustaining the blockchain.

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