In 2021, the NFT market grew to an astounding $41 billion. Now, NFT value is approaching that of fine art, making it one of the most profitable new markets in recent history.
But, what is an NFT? If you’re interested in investing in this profitable venture, you might first want to know exactly what you are purchasing. In this quick guide, we break down what NFTs are and why they hold so much value.
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What Are NFTs?
Nonfungible tokens NFTs, are confusing to outsiders. Most of us see the word NFT connected to pieces of digital art and assume those pieces are the NFT. But, that is not the case.
The piece of art is just that. The NFT attaches to it as a separate token on the crypto blockchain. This token is nonfungible, which means it is impossible to duplicate.
While NFTs have paved the way for making digital art originals possible, they aren’t all attached to digital items. NFTs can certify the authenticity for any real-world items including traditional art, sculptures, and even real estate.
How Do NFTs Work?
NFTs’ crypto connection is what makes them special. Cryptocurrencies like Bitcoin and Etherium are fungible. You can trade these tokens for one another because they are identical and equal.
When you create a token on the same blockchain as a cryptocurrency but make it different from the other tokens, it becomes nonfungible because it is no longer equal to the other tokens on the blockchain. So, now you have a unique token that is immune to duplication.
These unique tokens become digital representations of an asset. They have ownership values that transfer easily which makes them sellable. Now, digital artists can sell their work with NFTs to allow people to own the “original” digital art.
The Value Of NFTs
The value of an NFT becomes confusing. How can one piece of digital art sell for millions while I can right-click on the image and download it for free? How does that not devalue the artwork?
We need to remember that the artwork does not hold value when we talk about NFTs. The token is. You can download an image a million times over for free and no one would be the wiser. You still do not own that image.
You cannot download the token that dictates the ownership of that image. That token is locked to the owner, impossible to duplicate or hack.
An NFT is therefore the most secure form of authenticity ever created. While scammers can duplicate real-life certificates to near perfection, NFTs are iron-clad. This security makes them more alluring to collectors and increases their overall value.
Where To Find NFTs
If you’re interested in starting your own NFT collection, you should look for reputable sellers. Super Rare uses an extensive artist screening program to identify rare digital art that isn’t available anywhere else on the internet.
Check out their features page for some valuable NFT deals today.
NFT News And More
The NFT market is a fast-paced, growing venture. New NFT news comes out daily. Stay up to date on the latest in NFTs and more by checking out our art blog today!