BY NEAL FOUNDLY
What is an NFT and should you buy one? There’s much curiosity as to whether to invest in an NFT, but is it worth the money? Let’s start with the basics. NFT stands for ‘non-fungible token’ which simply means a one-of-a-kind digital item that cannot be duplicated. In the real world, if you own an original Picasso painting, you have a non-fungible asset because each is unique compared to, say, pound coins which are homogeneous and easily tradable for another pound coin. So, instead of real-world Picasso paintings, these NFTs are digital assets which can involve pretty much anything such as a tweet; a mega-sword for your warrior in Fortnite; a TikTok video or song or, more commonly at the moment, digital art. When someone buys an NFT, they obtain ownership in the sense that it becomes their property - and is a digital certificate of ownership. These certificates can be bought and sold via platforms and then transacted on blockchains that use cryptocurrencies for payments. You can read more in our online article, ‘In a nutshell: digital and cryptocurrencies.’ In reality, an NFT is just a string of digital code that you keep in your cryptocurrency wallet and so you never actually take possession of a ‘thing’ in real life. Generally, the owner of the NFT will have a limited ability to share or reproduce the item itself.
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Welcome to the ‘Bored Ape Yacht Club’ (BAYC) So, ownership of digital assets is up for grabs but how do you value them? In these early Wild West days of NFTs, the answer has been to create a buzz. Create a cool digital image; sell an iconic artefact like Twitter founder’s first tweet; get Paris Hilton or Eminem to endorse your art, and so on. This lures buyers in on the basis that there is some cachet or scarcity that would infer some value. Better still, create an exclusive online club where members create their own buzz. For example, at the time of writing this article Twitter user ‘Byson’ tweeted: “Today marks my first day in the NFT world, I deposited 40 Ethereum and was unsure what to buy, and today I purchased an NFT for $30,000. I’m now part of the BAYC family.”
