NFTs – What are They? How do They Work?
Image from Shutterstock
Mar 31, 2022
Chances are that you’ve heard of NFTs. They have experienced a surge of popularity in the cryptocurrency community and added a whole other level to how crypto can be consumed by people.
“NFT” stands for non-fungible token. Something that is fungible can be described as anything that is, “able to replace or be replaced by another identical item; mutually interchangeable,” the Oxford English Dictionary states. For example, ten one-dollar bills can be exchanged for one ten-dollar bill. Those items are fungible. NFTs are not fungible. An example of something that is not fungible is art. An original Picasso painting is not worth the same amount of money as your little cousin’s stick figure drawing. Therefore, they cannot be exchanged equally.
Yes, it can be confusing but stick with me.
As stated previously, NFTs are non-fungible just the same as artwork. That is the best way to describe an NFT: digital artwork. Most NFTs are essentially JPEG images that have an assigned value in terms of cryptocurrency. “NFTs are a digital asset. They could be a picture of anything and each one is unique to itself,” Drake Albritton, a senior said.
So you’re probably wondering what makes an NFT worth any money. Well, the blockchain is what holds an NFT’s value. The blockchain is a log of the digital footprint made by an NFT. This means that when an NFT is created, purchased, or traded it is recorded on the blockchain. Because all of this data is being tracked it makes that NFT one of a kind. Since it is one of a kind it is non-fungible and can be assigned a certain value. “It is a system that is used to record information. The blockchain system makes it difficult to cheat the system,” Andre Jitomo, a senior who has experience with NFTs, said.
Now you understand what an NFT is and how it works. Congratulations, that is the hard part out of the way.
“I BST (buy, sell and trade) NFTs to build capital for future investments and personal spending,” Senior Andre Jitomo said.
Some serious money can be made buying and selling NFTs. Serious money can also be lost in this game
“Stocks are risky, cryptocurrency is 10x riskier than stocks, NFTs are 10x riskier than cryptocurrency, but when you do the research… the risk is worth it,” Joe Metzler, a senior, said.
At the moment, NFTs are still relatively young and the future of NFTs is uncertain. “I think once the cryptocurrency gets centralized and gets regulated, so will NFTs. I see NFTs as more of a short-term gain than a long-term investment,” Jitomo said.
