The rise of NFT’s

3 min read

by | Jan 31, 2022

Author: Mattew Starczewski

 What is an NFT?

In 2021, we began to see a breakout in many different ways to invest. Cryptocurrency exploded as digital forms of currency seem to be the latest trend in many young investors. For example, bitcoin has almost doubled in value this year and ethereum has quadrupled in price. As more and more people begin to jump into “crypto”, there is another new form of technology that is beginning to rise as well. NFT’s, short for non-fungible token, has also exploded this year. NFT’s have been around ever since 2014/2015, but it wasn’t until early 2021 where investors jumped in and really embraced the NFT hype.  An NFT is essentially buying ownership of a digital piece of art. It is a way for collectors of art to be able to claim ownership in the digital space. The way it works is that when somebody decides to make their art into NFT, they can sell it on a multitude of exchanges such as OpenSea or Solana. There, people can then make bids with their cryptocurrency like ethereum on the artwork, causing the art to be valued at whatever people are willing to buy it at. Whoever pays the highest amount would then have the artwork transferred into their crypto wallet.

What can be an NFT?

There is no limitation to what can be an NFT. Music albums, sports clips, or even movies could all be sold as an NFT. There are even games such as The Sandbox that are beginning to incorporate NFT’s into it. One of the more popular NFT’s that rose this year are “cryptopunks.” These little 8-bit avatars have been all the rage this year as people are lining up in order to buy one. These have gone upwards to a million dollars,and have increased in value by 1,933% (Benzinga) this year which shows the true scale of what people are willing to spend for an NFT.

 

Are there any Disadvantages?

As of right now, there are few disadvantages when it comes to NFT’s. One of which is the “right-click save” argument in which somebody can just save the artwork. Another is the concern about the environment as it takes a lot of electricity to use blockchain technology. This can be combated by finding cleaner sources of energy. Lastly, the last disadvantage is the high transaction fees. It costs upwards to three times what you pay for the NFT in order to have it written down as yours. This is a problem that companies are trying to solve as it would open the door for more people to get into the NFT realm.

 

 

 

 

 

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