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
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×