Tiger Woods is the latest to sell digital collectibles as NFTs. But how much are they going for nowadays? We’ll explain.
You’ve probably heard about NFTs, short for nonfungible tokens. But what exactly are they? It’s a new type of digital asset similar to cryptocurrency that can cost you a lot of money. The craze began in 2017, and since then, Twitter’s Jack Dorsey, rock legends Kings of Leon and even Tiger Woods have sold NFTs for a pretty penny (more below).
But what exactly are you buying when you purchase an NFT? It’s not a collectible that you can keep in your dresser drawer, like Pokemon cards, a comic book or paintings. They’re entirely digital and are tied to almost anything — a video highlight, a meme or even a tweet.
If this doesn’t make much sense to you, well you’re not alone.
In short, NFTs offer a blockchain-created certificate of authenticity for a digital asset or piece of art. The interest has created a digital market that boasted $250 million in sales in 2020, with NFTs reaching new levels of hype from Visa, Warner Music Group and Nike. Even toilet paper companies are in on the latest cryptocurrency wave. Still confused? We’ll break down what NFTs really are, how much they cost and how you can get in on the latest bidding wars.
This is the part that takes a bit of open-mindedness. An NFT is a unique digital token, with most using the Ethereum blockchain to digitally record transactions. It’s not a cryptocurrency like Bitcoin or Ethereum, because those are fungible — exchangeable for another Bitcoin or cash. NFTs are recorded in a digital ledger in the same way as cryptocurrency, so there’s a listing of who owns each one.
What makes an NFT unique is the digital asset tied to the token. This can be an image, video, tweet or piece of music that’s uploaded to a marketplace, which creates the NFT to be sold.
That’s the real kicker to understanding the whole concept. The person who buys the NFT doesn’t own the actual asset.
“NFTs challenge the idea of ownership: digital files can be reproduced infinitely and you do not (usually) buy the copyright or a license when purchasing an NFT,” said Jeffrey Thompson, associate professor at the Stevens Institute of Technology in Hoboken, New Jersey.
For example, the creator of the Nyan Cat meme sold an NFT of it for $590,000. The person who bought the token owns the token, but doesn’t actually own the meme. That still belongs to the creator, who held onto intellectual and creative rights.
What the owner of the token has is a record and a hash code showing ownership of the unique token associated with the particular digital asset. People might download Nyan Cat and use it on social media if they want, but they won’t own the token. This also means they can’t sell the token as the owner can.