{"id":323,"date":"2021-10-29T19:38:07","date_gmt":"2021-10-29T23:38:07","guid":{"rendered":"https:\/\/blogs.dalton.org\/thebottomline\/?p=323"},"modified":"2021-10-29T19:38:08","modified_gmt":"2021-10-29T23:38:08","slug":"nfts-what-are-they-and-why-should-you-care","status":"publish","type":"post","link":"https:\/\/blogs.dalton.org\/thebottomline\/2021\/10\/29\/nfts-what-are-they-and-why-should-you-care\/","title":{"rendered":"NFTs: What Are They and Why Should You Care?"},"content":{"rendered":"\n
\n

NFTs have been a hot topic in the financial world recently, sparking controversy regarding their legitimacy as a newfound investment opportunity. In order to take a side in this debate, however, one must first understand what NFTs are. The term NFT stands for a “non-fungible token,” or something that is fully distinguishable and therefore cannot be replaced directly with something else. They are unlike fungible tokens, for example, cryptocurrencies, which are identical to one another and can be sold and purchased interchangeably.1<\/sup> Transitioning to the purpose of NFTs, they offer a unique way to monetize digital goods that may previously have been available at little to no cost. While NFTs can be used for virtually any digital asset including songs, videos, images, and GIFs, they have been used most notably to make digital artwork discernible and therefore profitable through sale.2<\/sup> NFTs serve to meet the demands of an increasingly digital world. They provide artists the technology necessary to validate their work and permanently connect them to it in a way where they can now profit off it. <\/p>\n\n\n\n

So how exactly do NFTs work? An NFT is an asset that is authenticated using blockchain technology. In simple terms, blockchain is a digital ledger of transactions, recorded in a way that makes it extremely difficult to alter or hack. It is this blockchain technology that provides buyers with the legitimacy of the NFT as well as the confirmation of their ownership.3<\/sup> And while the technology of NFTs has been around since the mid-2010s, it had not reached mainstream status until late 2017 with the creation of the site \u201cCryptoKitties,\u201d a platform that enabled people to buy and \u201cbreed\u201d digital cats using cryptocurrency.4<\/sup> Since then, however, the market size of NFTs has grown exponentially, increasing by 299% in 2020 alone and reaching a value of over $250 million. 2021 seems to be posing a similar situation for the currency with the artist Mike Winkelmann, also known as Beeple, selling an NFT for one of his digital art pieces at $69.3 million this past March, the third-highest price reached by a living artist.5<\/sup><\/p>\n<\/div><\/div>\n\n\n\n

Despite their rise in popularity, many financial professionals still remain skeptical about NFTs and their supposed value proposition. Much of this doubt stems from the notion that anyone is capable of copying a digital file as many times as they want. That means that even if someone else bought a piece of artwork as an NFT for millions of dollars, the same file is able to be downloaded an infinite amount of times.6<\/sup> However, the purported worth of the NFT lies in what cannot be copied: the ownership of the work.7<\/sup> For while anyone is able to purchase a copy, only the sole buyer of the NFT can own the original. So, whether NFTs represent that of a Van Gogh painting or rather something akin to a trading card is truly where the discrepancy comes into play. Do NFTs represent the future of fine art collecting? Are they the key to future investing? Those are questions that become more contested each day and will only be answered with time. <\/p>\n\n\n\n

By: Natalie Martin<\/sup><\/p>\n\n\n\n

\n
\n
\n
\n

1 Mitchell Clark, \u201cNFTs, Explained,\u201d The Verge, last modified March 11, 2021, accessed April 27, 2021, https:\/\/www.theverge.com\/22310188\/nft-explainer-what-is-blockchain-crypto-art-faq. <\/sub><\/p>\n\n\n\n

2  Josie Thaddeus-Johns, \u201cWhat Are NFTs, Anyway? One Just Sold for $69 Million.,\u201d The NY Times<\/em>, accessed April 27, 2021, https:\/\/www.nytimes.com\/2021\/03\/11\/arts\/design\/what-is-an-nft.html?. <\/sub><\/p>\n\n\n\n

3 Thaddeus-Johns, \u201cWhat Are NFTs.\u201d <\/sub><\/p>\n\n\n\n

4 Clark, \u201cNFTs, Explained,\u201d The Verge. <\/sub><\/p>\n\n\n\n

5 Thaddeus-Johns, \u201cWhat Are NFTs.\u201d <\/sub><\/p>\n\n\n\n

6 Clark, \u201cNFTs, Explained,\u201d The Verge. <\/sub><\/p>\n\n\n\n

7 Thaddeus-Johns, \u201cWhat Are NFTs.\u201d<\/sub> <\/p>\n<\/div><\/div>\n\n\n\n

<\/p>\n<\/div><\/div>\n<\/div><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

NFTs have been a hot topic in the financial world recently, sparking controversy regarding their legitimacy as a newfound investment opportunity. In order to take a side in this debate, however, one…<\/p>\n","protected":false},"author":4204,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[331117],"tags":[331114,331106],"ppma_author":[331123],"class_list":["post-323","post","type-post","status-publish","format-standard","hentry","category-the-bottom-line","tag-informational-articles","tag-natalie-martin"],"authors":[{"term_id":331123,"user_id":4204,"is_guest":0,"slug":"c22nm1-2","display_name":"EBITDAlton Team","avatar_url":"https:\/\/blogs.dalton.org\/thebottomline\/wp-content\/wphb-cache\/gravatar\/254\/25498de874dab1cc6a0eafb4e96927c1x96.jpg","1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/posts\/323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/users\/4204"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/comments?post=323"}],"version-history":[{"count":0,"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/posts\/323\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/media?parent=323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/categories?post=323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/tags?post=323"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.dalton.org\/thebottomline\/wp-json\/wp\/v2\/ppma_author?post=323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}