NFT’s are the new bitcoin

In just a few months, NFTs – short for “Non-Fungible Tokens” – have grown popular amongst consumers, artists, technologists, sports enthusiasts, speculators, even venture capitalists.

There’s a new story on the Internet nearly every day about the multi-million-dollar sales of NFT artwork, or the celebrities like Lindsay Lohan and Mark Cuban, NFTs getting into it. But what exactly is it? To understand this newest blockchain phenomenon, one must start with the basics.

Non-Fungible Tokens (NFTs)

The “token” part: NFTs are tradable digital assets that are hosted on a blockchain, much like bitcoin (BTC) or ether (ETH). However, unlike cryptocurrencies, NFTs feature embedded digital files of an artwork, or a video, or some other digital representation. Currently, most NFTs are traded online, are stored online, are displayed online, and hence are purely a digital experience.

The “non-fungible” part: Each NFT token is its own unique digital entity that cannot be reproduced or copied. For example, if you own the NFT of an image, you can be assured in the fact that nobody else in the world can lay claim to it – or, that you "own" it.

NFTs’ non-fungibility is a distinguishing feature from Bitcoin and other cryptocurrencies. If you sell your bitcoin, then buy bitcoin a few minutes later, your new bitcoin is the same as the bitcoin you held earlier. But if you sold your NFT and purchased another NFT, then you’re holding a new and different asset.

In other words, bitcoin is "fungible" because one bitcoin will always cost as much as another bitcoin, but NFTs will (probably) cost different amounts at various times. While one NFT could go up in value, while the other could crash, or vice versa.

How are NFTs used?

Beyond videogames and artwork, NFT enthusiasts are pointing to a host of other potential use cases, from property rights and events tickets to business contracts and real estate. Indeed, the idea of putting real-world things on the blockchain has long excited crypto enthusiasts; and the NFT model is making that a reality.

Are NFTs stable?

Plenty of experts believe NFT boom will disappear. Yet consumers around the world are increasingly buying digital-only products. That’s especially true for Millennial and Gen Z consumers, who have already spent billions of dollars on in-app products for video games. To young people, NFTs seem more natural than classical physical art pieces. Even so, there are valid concerns that NFT valuations have become inflated. Just as bitcoin, NFT prices are likely to swing wildly, too.

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