NFTs became something of a digital phenomenon in 2021. With stories of some being sold for thousands – even millions – of dollars, they are getting significantly more mainstream. However, there are a still a lot of people – understandably so – who have absolutely no idea what they are. If you fall into that category, we’ll try and fix that for you…
NFT stands for Non-Fungible Token. I doubt that’s cleared things up too much, but it’s essentially a digital receipt of ownership that cannot be forged or tampered with. It’s non-fungible because it has totally unique properties, like with a house, a piece of art or a song file. As opposed to a fungible asset like money, such as a £5 note – if you swapped that for five pound coins, the value remains the same.
The most prominent NFTs have been based around different forms of digital art. They can, however, represent ownership of any unique physical or digital asset. And because ownership of an NFT is secured on the blockchain, they are being touted as the future of documents such as deeds for properties. While the asset can be replicated, such as digital artwork being screenshotted and shared multiple times on social media, the Blockchain proves the original ownership of the token itself.
Why are NFTs being sold for so much?
NFT projects are as much, probably more so in fact, about the creator/business and the journey they can take the audience on, as they are about the token itself. That’s why there’s so much marketing potential in this innovative digital space and we’re seeing famous individuals and organisations come up with creative ways to drive interest in their NFTs and combine them with their traditional marketing efforts.
Audience development and engagement is therefore a critical part of making any NFT project a success. It creates a mutually beneficial relationship between seller and audience – as scarcity of an NFT increases, so does its value. The audience benefits by earning from their involvement with the seller, while hype builds around the project and therefore increasing the value of future NFTs.
Evidently, being an established name to begin with s a huge advantage. In early 2021, music artist Grimes sold her digital artwork for $6 million. Twitter co-founder Jack Dorsey also minted the first ever tweet, which went on to sell for $2.9 million.
Blockchain, cryptocurrency, etc…
As mentioned above, ownership of NFTs is recorded on the Blockchain, but if you’re not familiar with the Blockchain, it is basically a shared ledger documenting who owns what. You may have heard it in relation to cryptocurrency, such as Bitcoin. The thousands of computers across the world which maintain this ledger are what prevents NFTs from being modified or duplicated.
Ethereum, another form of cryptocurrency, is mainly what’s used to purchase NFTs. After acquiring Ethereum on a crypto trading app like Coinbase, you can purchase NFTs from marketplaces such as OpenSea, Mintable or Nifty Gateway (what a name!).
Keep an eye on our blogs to discover more helpful NFT info and tips. In the meantime, if you want advice from a consultancy at the forefront of the NFT space to find out how you can make them work for your business, get in touch with the Nifty team today.