The popular abbreviation of NFT seems to be appearing everywhere lately. Whether it’s a sale or purchase made by an influencer you follow, successful business people swearing by, or against them, or even your friend showing you his crypto and NFT portfolio, NFTs don’t appear to be going anywhere.
For many, there is an excitement and a mild fear regarding NFTs. For one, a number of people still wonder what does NFT stand for and what does it mean, and on the other hand, how a three letter word could so rapidly begin to shape pop culture seems like a strange mystery.
Thankfully, the deeper you dig into NFTs, the more simple they become.
What does NFT stand for? NFT stands for Non-Fungible Token. This means that it is a digital token (which can take many forms), which cannot be replicated or reproduced.
Think of it like this. You can go to your local coffee shop and purchase a latte for five dollars. The barista takes your order, gives you your coffee, and puts that five dollars in the register. You have exchanged money for a product. The five dollars you paid the barista with will not become more or less valuable than five dollars because you purchased a latte with it. If it is given for change used to break a ten-dollar-bill, it is still only worth five dollars. This is because it is fungible.
Alternatively, you knit a sweater and decide to try to sell it. Someone approaches you with a painting they made and offers to trade it for your sweater. You agree. Each of your products has been given worth purely through the other’s bestowed value. The sweater you knitted cannot be purchased in a store, or perfectly reproduced. The artwork you acquired is original, one-of-a-kind oil on canvas. Both of these things are non-fungible.
So what does NFT stand for? These non-fungible tokens are digitally unique assets that are cryptographically identified using blockchain technology. Whatever the NFT may be, there can only be one—or a specific number—ever. An individual’s NFT is theirs, it is uniquely identifiable. Its value is determined by what people are willing to pay for it, or what people are willing to trade for it, much like the sweater/oil painting scenario above.
The world is in a creative boom. With the growth of social media, the accessibility of artwork and expression of others, and the explosion of digital art throughout the COVID-19 pandemic, there has never been a larger base of capable artists and art-interested people.
NFTs have capitalized on this booming culture, by becoming one of the most accessible forms of art trading—in all of its mediums. Digital assets such as logos, clipart, video, music, and more are now uniquely owned by individuals. These can be utilized for trade, exchanged to others for monetary value, or held onto simply because the owner likes them.
This type of system allows for almost anyone to become involved in the NFT industry, while also capitalizing on the movements of cryptocurrency. Cryptocurrencies existing as decentralized currencies that can be bought, traded, and invested in are gradually becoming larger parts of our global economy, but can be scary for those without investing experience to get into.
NFTs, however, tend to avoid this issue. Even if a person is not interested in purchasing NFTs, it can be a fairly simple process to create one, or a number, and start participating in the economy.
Additionally, NFTs are popularly exchanged via cryptocurrency (predominantly Ethereum). This allows people to begin becoming involved with the cryptocurrency economy without taking any inherently large risks.
Are NFTs just a fad, or are they going to be around for a while?
While it’s impossible to say how long NFTs will be around, or what form they will take, the best guess is that NFTs are the start of something permanent. With digital assets not only becoming more popular, but becoming more necessary, and the metaverse experiencing its beginnings, unique digital aspects may become a household commonality.
As we learned from the early stages of cryptocurrency, getting involved with the early stages of NFTs has the potential to boast intense profits, and may help you become more comfortable with the economy before it is completely immersed in our culture.
Whether you are considering making your own, beginning to purchase and trade, or even just research, learning and understanding NFTs has potential to set you up for deeper success in the future. Start small, do what’s comfortable for you, and you’ll likely find that NFTs are not only highly understandable, but quite fun!