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talking nfts - what are they?

NFTs have been taking the world by storm as of late and it’s been difficult to avoid persistent news stories of astronomical NFT sales or crypto enthusiasts bombarding your social media feeds.

We don’t blame you if you’ve been finding the whole NFT craze a little mindboggling. If terms like “fungible” and “blockchain” are still a foreign language to you, look no further - we’ve taken the liberty of breaking what exactly NFTs are as best we could. Strap in.

what does nft stand for?

Non-Fungible Token. 

“Fungible” means that an asset can be interchanged with an asset or assets of an equal value. Money is the most obvious example of this – you can swap a £10 note for two fivers which will have the same value. 

So when an asset is “non-fungible” it is completely unique, and cannot be replicated or interchanged for another item.  

Are NFTs the same as crypto?

NFTs run parallel to cryptocurrency in the sense that they both live on “blockchain,” which is a digitised, un-hackable public record of transactions.  

However, cryptocurrencies such as Bitcoin are interchangeable with another, meaning they are (you guessed it) fungible. NFTs are unique and cannot be changed like for like, as they are coded to have unique IDs that another token cannot reproduce. 

A digital rendition of the Nyan Cat meme from 2011 sold for about $590,000 as an NFT – Image credit: Rob Bulmahn

What are some examples of NFTs?

NFTs can be pretty much anything, so could not possibly all be mentioned, but some of the most well-known types of NFTs include: 

  • A particular piece of digital artwork – a piece recently sold at Christie’s auction for £50 million 
  • video highlight – the premiss of the hugely popular basketball highlights trading platform NBA Top Shot 
  • music album – the Kings of Leon NFT album generated $2 million in sales 
  • tweet – Twitter CEO Jack Dorsey turned his first ever tweet into an NFT and sold it for just under $3 million (see below)

What stops people copying nfts?

Essentially, nothing – but no screengrab will ever be worth a penny. The buyer of the NFT owns its token, and their proof of purchase can be tracked reliably on blockchain. It’s comparable to owning a Banksy print rather than a Banksy original. 

How do NFTs gain their value?

There is no concrete answer for this, as their value is determined purely on how much somebody is willing to pay for the item. However, much of the value stems from the fact that each NFT is coded to be unique and that their transaction history is easily retrievable via blockchain. Plus, many people think the value of NFTs will shoot up as the blockchain becomes more widely used, hence the big bucks being spent on them.  

How do NFTs gain their value?

The NFT space has mouth-watering potential to significantly alter video games in the future. Users may be able to purchase NFT skins which they can transfer from game to game and advertisers could be renting out virtual land in open-world titles to showcase their products. 

We’ll cover this and much more in a series of NFT blogs. Stay tuned.