Is a tweet worth over $2 million? Would you dream of paying millions of dollars for an image? Sound insane? Welcome to the world of NFTs. But what is a NFT? In this article we are going to go over what NFTs are, what cryptocurrency is, and consider whether NFTs are legit or just a scam.
What Exactly is a NFT?
NFT is short for Non-Fungible Token. Let’s break it down so we can have a somewhat understandable definition. Non-Fungible means unique. For example, the Mona Lisa is Non-Fungible. Though copies can be made they will never carry the value of the original because it is unique. Another example could be a trading card that is so unique that only one was made.
Basically a NFT is a unique digital token that someone has made and has had cash value assigned to it in the form of crypto. It can be anything digital that someone has created. NFTs rely on cryptocurrency and a blockchain. I will explain more about crypto and blockchains in a moment. To buy an NFT you purchase it from a NFT marketplace using crypto. To sell a NFT you list it on a NFT marketplace. The cryptocurrency that generally supports NFTs is Ethereum though others can as well. Here are some more valuable NFT examples:
Sold for $69 million.
Sold for $6.6 million.
Sold for $6 million.
Sold for $4.1 million.
Does all of this sound crazy? Don’t worry, it does to me too. But it does make sense on some level if you think about it. The reason that NFTs have been assigned value is similar to the way an old comic book, an extremely rare trading card, or a collectible of any kind that is rare is assigned value. It is unique and people view it as valuable. I know that sounds simplistic (and it is) but it’s true. Believe it or not the founder of Twitter actually sold a tweet for just under $3 million.
Yes a digital image actually sold for $69 million. One thing to remind ourselves of right now is that there was a time when many thought that the idea of cryptocurrency was crazy (and some still do). Like crypto it looks like NFTs are a thing and very possibly here to stay. But to understand NFT’s it helps to have at least a basic understanding of cryptocurrency.
What is Crypto?
There are many types of cryptocurrency. A few popular ones are:
- Binance Coin
- USD Coin
Yes there are many others as well.
A basic definition of crypto is that it is a digital way to pay for things. It is called cryptocurrency because it is a digital currency whose transactions are verified through encryption. It doesn’t rely on banks in any way. Things like debit cards, checks, paper money, and coins aren’t necessary with crypto. It is a currency but completely digital and not tied to any nation. It is a digital entry in a database. The database is what is known as the crypto’s blockchain. Think of a blockchain as a digital ledger. You store your cryptocurrency in a digital wallet.
Are NFTs Legit?
There really isn’t a black and white yes or no answer to this question. On the on hand people have made money investing in or creating and selling NFTs. On the other hand there are plenty of fraudulent projects out there. The best way to protect yourself is to always look for the blue check mark by the artists name. If the check mark of authenticity isn’t there contact the artist through their website or social media directly.
Here are some tips to avoid scams and keep your NFT activities safe:
- Never enter information through a pop-up or a link in an email.
- Before you purchase an NFT be sure to look up all the information about it that you can.
- Double check links to make sure they are going where you think they are.
- Use a hardware wallet. Hardware wallets are far more secure.
- Always use two factor authentication.
- If someone sends you a DM about an NFT be suspicious and don’t click any links.
- Never share your private key.
- Never share your seed phrase.
- Don’t share your screen with strangers.
- Be cautious of airdrops.
- Always look for the blue check mark.
How to Get Started Buying NFTs
Purchasing a NFT is a pretty simple process. Just like going to a physical store you make sure you have your wallet, be sure it has money in it, find what you want, and pay for it.
- Get a digital wallet.
- Get some cryptocurrency.
- Go to an NFT marketplace to shop for and buy your first NFT.
There is some setup work that you will need to do but the help or support section of the marketplace should walk you through what you need to do.
Here are some of the best digital wallets:
Any of the three wallets just mentioned should work great for you. If you want the most beginner friendly option then Coinbase is the definitive winner. If the best security is what you are after then you should buy a hardware wallet. Ledger seems to be a highly recommended one but there are several that should work for you.
Here are some popular NFT marketplaces:
To learn more about NFTs:
If you are skeptical when it comes to NFTs I get it. To an extent I am as well. I can confidently say they really are a thing. I can also say that some have made a fortune with them. I should let you know that it is extremely few that have done so. There has been those that have made a profit on them. Again, they still make up a minority.
Is it worth it to create or invest in a NFT? Is the whole NFT thing just a bubble waiting to burst like the dot com bubble did? I don’t know the answer to either of those questions. The honest answer is that no one knows for sure what the future of the NFT market is. What we do know for sure is that NFTs are here, getting more and more popular, and people have made money on them.
Have you created or bought a NFT? Are you thinking about doing so? Let me know down in the comments.