What is an NFT?

NFT stands for none-fungible token. Fungible is an asset that can be swapped with an identical item, for example a dollar bill can be swapped for another dollar bill of equal value - it's the same. Something that is none-fungible is an asset that can't be replaced such as rare art pieces - for example the original Mona Lisa would be irreplaceable if destroyed. NFTs are created on blockchain, some of the more popular being Ethereum, Polygon and XRP.

Blockchains are decentralized digital ledgers that are distributed across the web. Transactions on the these blockchains can't be changed and can be viewed when public. There are many examples of blockchains, with some of the more popular being Bitcoin, Ethereum and Cardano, amongst others. Critics of NFTs argue that NFTs could just be saved and used without needing to purchase - and this isn't strictly incorrect, however its value is derived from it belonging to a collection and what makes it valuable. A saved image has no-resale value - you own a copy of a Mona Lisa or a copy of a 1st Edition Shadowless Charizard.

NFTs can become valuable due to their utility and/or virality. If an NFT offers something other than just being an expensive JPEG, such as the promise of offering airdrops, this can help boost a price. The metal band Avenged Sevenfold having recently offered a collection of their iconic Deathbats with the potential for some rarer items to include gig tickets, merch and more. Similarly, if a celebrity owns an NFT this can make a collection even more popular / valuable. Eminem, Steve Aoki and Mike Shinoda being just a few celebrities to have owned a Bored Ape Yacht Club (BAYC) NFT.

NFTs are revolutionary in the sense it provides digital assets with a form of authenticity being the blockchain. NFTs have many future potential usages, such as being utilised in real-estate, medical records. History is in the making.