Investors and Collectors Are Spending Millions on NFTs
What Is an NFT?
People are spending millions of dollars on digital collectors items, known as NFTs or non-fungible tokens. NFTs can take a variety of forms, from digital trading cards to digital art.
NFT ownership is recorded on a blockchain, a digital ledger similar to the networks that Bitcoin and other cryptocurrencies use. But in contrast to most cryptocurrencies, each NFT is unique. People cannot exchange one NFT for another the way they could with bitcoins or traditional currencies.
Interest in NFTs Across Industries
A variety of industries are capitalizing on the NFT boom. The NBA has licensed short clips showing highlights from players to a startup called Dapper Labs. The company digitizes the footage and creates scarcity. Basketball fans and investors can then buy and sell the clips on a platform called NBA Top Shot.
Art auction house Christie’s is in the process of running an auction for a virtual art piece by the artist, Beeple. The sale has not yet closed, but the piece has already been bid up to $3 million. Two weeks ago, a piece of video clip art by Beeple sold for $6.6 million.
Skeptics and Supporters of NFTs
The value of NFT transactions quadrupled last year, hitting $250 million. During the pandemic, many have had extra time and extra cash on their hands, so they have sought new ways to invest.
Some are excited about the NFT boom, saying that it is finally providing a way for artists to be paid fairly for their online creations. If NFTs gain traction, it could potentially solve problems created by the fact that the internet allows people to listen to songs and view images and videos for free, with little or no compensation going to artists.
In contrast, NFT skeptics are concerned that investments in these digital collectibles are too speculative and the bubble is bound to pop. In the coming months, people across a variety of industries will be eager to see how the NFT boom unfolds.
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