What are NFTs? Non-fungible tokens explained

Just what are NFTs? It’s the question everyone is asking as digital art explodes in value. While NFTs have been around for a few years it took Beeple, CryptoPunks and Bored Ape Yacht Club to put this new technology on the map. Since then Adidas, Nike, Disney, McDonalds and many celebrities has jumped into NFTs.

Answering the question, ‘what are NFTs?’ is the easy part: non-fungible tokens are a way of registering a one-of-a-kind image, video, or any form of digital, or indeed, physical item on a blockchain. It’s decentralised and open to scrutiny.

How do NFTs work?

At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs. (Some already have.)

What’s worth picking up at the NFT supermarket?

NFT can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.

What’s the point of NFTs?

That really depends on whether you’re an artist or a buyer.

I’m an artist.

First off: I’m proud of you. Way to go. You might be interested in NFT because it gives you a way to sell work that there otherwise might not be much of a market for. If you come up with a really cool digital sticker idea, what are you going to do? Sell it on the iMessage App Store? No way.

Also, NFTs have a feature that you can enable that will pay you a percentage every time the NFT is sold or changes hands, making sure that if your work gets super popular and balloons in value, you’ll see some of that benefit.

I’m a buyer.

One of the obvious benefits of buying art is it lets you financially support artists you like, and that’s true with NFT (which are way trendier than, like, Telegram stickers). Buying an NFT also usually gets you some basic usage rights, like being able to post the image online or set it as your profile picture. Plus, of course, there are bragging rights that you own the art, with a blockchain entry to back it up