Jack Dorsey just sold Twitter’s first-ever Tweet for $2.9 million. And Mark Cuban made $1,700 for writing a few motivational words on a computer screen.
If those two sentences have you asking yourself, ‘But… how?’ then you’re in the right place — because we’re here to explain how thousands of people are using something called an NFT to sell pretty much anything.
Let’s start with the basics.
What Is An NFT?
NFT stands for non-fungible token.
In economic terms, fungible means something you can easily interchange (like money: you can happily swap a $10 bill for two $5 bills).
On the other hand, non-fungible means something you can’t swap like-for-like (owing to the unique properties of the asset in question). Non-fungible assets include private houses, a tweet, even the Mona Lisa painting.
Sure, you can take photos — or screenshots — of them. But there’s only one of the original. Now, NFTs have come to represent the one-of-a-kind assets of the digital world. Strangely enough, however, while you can buy or sell them, the tokens have no tangible form.
They merely act as a digital certificate of ownership, be it for virtual or real-world assets, which leads us to our next question…
How Do NFTs Work?
Art is valuable because it is unique.
Digital files, however, are freely duplicated, copied, or shared without any way to prove which file is the original. At least, that used to be the case.
NFTs now allow creators to tokenize anything, using the token to digitally sign a proof of ownership certificate, which the owner can sell. As with cryptocurrency, the certificate sits on a distributed ledger.
And given that thousands of computers maintain the register, there’s no way for someone to duplicate an NFT. Better still, creators can use smart contracts to automate royalties should their original work ever be resold.
But when it comes to pricing an original NFT, what price should the token command? Well, that’s become somewhat of a rabbit hole.
How Much Are NFTs Worth?
As the introduction suggests: NFTs are worth as much as people are willing to pay.
An artist called Beeple sold one of his digital artworks for $69 million. Musician Grimes sold one of her pieces for $6 million.
It’s primarily a question of demand at the time of the sale. The sky-high prices of recent NFTs have led some both within and beyond the industry to ask whether we’re witnessing another form of crypto-bubble? In truth, it’s impossible to say.
There’s undoubtedly a high degree of excitement, possibly inflating prices. But when it comes to original work, even if it’s digital, price is subjective. If you fancy experiencing the NFT market in action, your chance may come soon.
Elitium is integrating an NFT platform as we speak. But only a limited number of clients will be able to invest in the unique works that we list.
Don’t miss another Beeple: apply to the Elitium App today.