In recent years, many famous celebrities and athletes have been using NFTs, non-fungible tokens, for their SNS (social network system) profile pictures. In Japan, professional baseball teams and professional soccer clubs are also using NFTs to show their players’ good plays. As I see more and more of these in my daily life, I have become curious about what NFT is and how it works, so I decided to look into it.
What is “NFT”?
First, NFTs are digitally created assets that represent real-world objects, such as art, music, in-game items and videos, etc. NFTs are often traded online and are called crypto assets because they are individually encrypted.
NFTs have been around since 2014, and trading in digital art has gained popularity in recent years. In 2021 alone, it is worth a whopping $41 billion.
Furthermore, NFTs are individually coded, either they are one of a kind or very limited. Arry Yu, chair of the Washington Technology Industry Cooperation Cascadia Blockchain Council, said, “Essentially, NFTs create digital scarcity.”
It’s a counterpoint to the constant offerings of many digital productions. If someone wants it, they can stop making it, and the NFT itself must increase in value.
But first, NFTs can be found elsewhere in different forms. For example, it was a securitization of digital art circulating (Conti and Schmidt, 2021).
How to buy “NFTs”
Several important items must be obtained to begin dealing with NFTs.
First, you must prepare a digital wallet. This digital wallet is where you keep the NFTs you purchase and the cryptocurrency you use to make those purchases. There are a variety of cryptocurrencies and cryptocurrency trading platforms, such as Coinbase, Kraken, eToro, PayPal, Robinhood, and others. Other payment methods also allow purchases to be made using credit cards. It is also possible to change the wallet to the purchaser’s preferred wallet later on the exchange.
Another thing to note here is that there is a fee when purchasing crypto. So, it is important to know how much of a percentage you are paying (Conti and Schmidt, 2021).
How to utilize “NFT”
NFTs are in the blockchain. What is blockchain? Blockchain is well known in this world as the underlying process that makes cryptocurrencies available for transactions.
NFTs are held on the Ethereum blockchain, but there are other blockchains as well.
An NFT is made from the following digital objects, which are classified according to whether they are tangible or intangible:
- Graphic arts
- GIFs
- Video or sports highlights
- Collectors’ items
- Virtual avatars
- Video game skins
- Designer sneakers
- Music
Twitter tweets are also included. Jack Dorsey, the founder of Twitter, sold his tweets to the NFT for $2.9 million.
An NFT is just like a collector or a collector’s painting, car, sneakers, etc., but in a digital form. It’s all digital.
NFTs, by their nature, can only be held once by a single person. However, by utilizing the blockchain technology, NFTs can be easily verified and passed between owners (Conti and Schmidt, 2021).
Should you buy “NFTs”?
Let’s say you have looked into NFTs and how to purchase and utilize them, but should you buy one or some?
NFTs are still brand new and have a short history. Their future is very difficult to predict. So, it may be a cause for pause because of the high risk involved in purchasing and holding them. Therefore, it may be a good idea to try to invest a small amount.
NFT investments are highly dependent on personal discretion. Therefore, if something is of value to you and interests you, you should consider purchasing it within the limits of your available money.
However, please keep in mind that NFTs are based on the feeling that someone wants it and wants to buy it. Therefore, if no one wants it, it may well be worth less than the price you paid for it. Worse yet, it could be unsellable.
Finally, NFTs are no different from other investment products, despite their various conditions. Therefore, it is important to think carefully, take into account the risks, and invest accordingly (Conti and Schmidt, 2021).
“Conclusion”
NFT is the future. That is why it is hot now and may soar even higher. However, it is also one with latent dangers due to the difficulty of predicting what lies ahead.
<Reference>
・ Conti, R. and Schmidt, J. (2021). What Is An NFT? Non-Fungible Tokens Explained. [online] Forbes Advisor. Available at: https://www.forbes.com/advisor/investing/cryptocurrency/nft-non-fungible-token/ [Accessed 19 August 2022].
