Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Non-fungible tokens explained – and why some are worth millions

Non-fungible tokens explained – and why some are worth millions

Recently there have been reports of artworks selling for millions of dollars – but those who buy it aren’t getting anything physical – they are getting a unique digital token known as NFTs

If you’ve heard the word NFT, or the phrase non-fungible token, and not had a clue what was going on, you’re not the only one.

Before 2021 it was a relatively rare term to hear, but in recent months it’s becoming increasingly common to hear it spoken about in relation to digital artwork being sold for millions.

NFTs are the latest craze from the world of cryptocurrency.

Christie’s auction house sold the first ever NFT artwork for a whopping $69m (£50m) this week – but the winning bidder will not receive anything physical.

Similarly, an online sale of NFTs by digital artist Pak fetched a massive $16.8million (£12.2million) at Sotheby’s. This included an image of a single pixel for $1.26million (£987,000).

Chris Torres, creator of Nyan Cat, sold his iconic meme for roughly $590,000 earlier this year


Instead, they will get a unique digital token known as an NFT. Confused? Don’t worry, we will do our best to explain.

What is an NFT?


NFT stands for non-fungible token, and is the latest cryptocurrency phenomenon to go mainstream.

In economics, a fungible asset is something with units that can be readily interchanged, like money. For example, you can swap a £20 note for two £10 notes and have the same value.

If something is non-fungible, it means that it has unique properties and can’t be interchanged with something else.


In relatively simple terms, NFTs are “one-of-a-kind” assets in the digital world, that can be sold like anything else.

NFTs can take the form of digital artwork, GIFs, tweets, virtual trading cards, music, virtual real estate and more.

They transform digital works of art and other collectibles into verifiable assets that can easily be traded on the blockchain.

These digital tokens can be thought of as certificates of ownerships for virtual or physical assets.

How do NFTs work?


No physical object changes hands, because NFTs exist exclusively in digital form.

As with crypto-currency, a blockchain (digital record) acts as a public ledger to verify ownership status.

Critics argue that these digital works can be copied and shared, and experts say that this is no different than to in the physical world.

A copy of any artwork is not the original.

The buyer of an NFT owns a “token” which proves only they have the “original” work.

Why are NFTs worth so much money?


In theory, anyone can tokenise their “one-of-a-kind” work as an NFT.

Art-collector Pablo Rodriquez-Fraile thinks the NFT boom has been accelerated by the coronavirus pandemic, but that ultimately it would have happened anyway.

He told Insider: “People have long used art to store value. Crypto extends easily into digital art.

“This is just a more modern approach to investing in art and using it like someone would use gold or bitcoin.”

Billionaire Mark Cuban told Insider that one of the reasons people pay so much is because NFTs are about scarcity.

He told Insider: “The buyer knows how many will be made and has blockchain proof of ownership.”

Experts who spoke to The Hustle also believe a boom in cryptocurrency in general has also generated interest in digital assets.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Russia’s A7 Builds a State-Linked Payments Network Beyond Western Sanctions
AI’s Next Bottleneck Is Power, Not Just Nvidia Chips
Meta Raises AI Spending Target to as Much as $145bn Despite Pressure Over Returns
Danube Drought Exposes Nazi Wrecks and Pushes Central Europe’s Power System to the Brink
Joe Biden’s Cancer Has Spread Beyond His Bones, Hunter Biden Says
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Why Markets May Look Quiet in August After Big Tech Earnings
UK Drought Cuts Harvests and Raises Food-Security Fears
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Senate Scrutinises AI-Driven Personalised Pricing
Spain Seeks Mainland Transfers for 1,100 Children Stranded in Ceuta
Spain and Morocco Trade Blame After 72,000 Migrants Enter Ceuta
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
Europe’s Heat and Drought Are Now Disrupting Power, Shipping and Tourism
Europe’s Drying Rivers Trigger Power Cuts, Factory Shutdowns and Wildfire Emergencies
Record-Low Danube Forces Nuclear Cuts and Emergency Power Curbs
Danube Drought Forces Hungary’s Paks Nuclear Plant Into Full Shutdown
Ceuta Death Toll Rises as Spain and Europe Clash Over Border Response
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Massive Wildfires Ravage Southern Europe: Fatalities in Greece and Evacuations Across France, Spain, and Turkey
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
×