Why is everyone investing in NFTs?

Non-fungible tokens, or NFTs, have become an overnight investment phenomenon, with $ 60 million in sales on Tuesday—Exceeding total sales for entirety of 2020. An NFT is a type of cryptographic token used to make digital media unique and therefore collectible, whether it’s a GIF or even a sporting event. If you’re wondering why everyone suddenly forgot how to take a simple screenshot, or if you’re baffled by it, you’re not alone.

What are NFTs?

Using blockchain technology, NFTs mean an official copy of digital media, which can then be sold by artists, musicians, or sports entities to earn money on content that would otherwise be cheap or free. NFTs are different from cryptocurrencies because they are not interchangeable – each is unique.

If you buy an NFT through a crypto asset market, it is up to you to keep it in your digital wallet or list it on the market. When sold, all computers in a decentralized network record the transaction on a shared ledger, which in effect is a certification of authenticity that cannot be changed or erased.

NFTs have a wide range of uses, including collectibles sports cards, digital art, and virtual real estate. For Yahoo, brands like Nike, Louis Vuitton, and the NBA has already started generating assets based on the NFT, with the NBA launching a dedicated collection site called NBA Top Shot. Last week, artist Chris Torres sold a unique version of Nyan cat, a popular meme of a flying cat with a Pop-Tart body leaving a rainbow trail, for the equivalent of around $ 580,000, by the New York Times. Rick and mortyJustin Roiland also jumped into the NFTs.

Why would anyone spend money on this?

It might seem weird to buy the “authentic” version of something that you can easily capture on your desktop, but it’s easy to overlook the emotional value of the collection, especially when it comes to original art. Part of the appeal is owning an authentic item created by an artist you love and the bragging rights that go with it. In essence, it’s not much different than owning an original Andy Warhol painting that can be viewed, sold, or shared – it just so happens to be digital. Additionally, crypto art is finally unblocking the problem of paid artists, as creators can schedule these assets to pay them royalties every time the collectible is sold.

In addition – and perhaps more importantly (if we explain the renewed interest in NFTs, which have been around for years) – more and more people are seeing these digital assets as speculative investments, since they can be bought and sold in online marketplaces (an NBA Top Shot digital collectible card from basketball star LeBron James recently sold for $ 100,000, for example).

The increase in recreational investments during the pandemic is also likely a factor: most of these exchanges of course accept cryptocurrencies, which meets the demand of individual investors who have cryptocurrency stocks and are looking to buy them. spend on something that is both fun and has the potential to make more money down the road. Whether this interest will continue to support the half-million dollar valuations of a flying cat GIF remains to be seen.