Everything you need to know about NFTs— and if you should even care

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Emily Mason

Hey, remember that time you took a photo of a rock and then thought “I could sell this for $100,000 of internet money?” No? Weird.

But that’s exactly what happened earlier this year as headlines broke about the emergence of NFTs—the online trend that made a few people rich, and everyone else confused.

Allow us to be your official NFT guide. We’re going to strip away the Tech Bro lingo so you can figure out if they’re worth your while. Who knows, maybe you’ll end up like this guy who earned half a million dollars for an animated video of a Pop-Tart cat. Dream big, friends.

First thing’s first

Before we dig into NFTs, we need to explain two other related concepts: cryptocurrency and blockchain.

Cryptocurrency is digital money. There are many similarities between crypto and the dollars sitting in your bank account right now. People use it to buy things from other people, which we call transactions.

The key difference between cryptocurrency and money (as we know it) is how we process those transactions. When you buy an item from a store using your debit card, you punch your information into the machine. The machine then asks your bank if you have enough money to buy that item. The bank either approves or rejects the transaction. And that’s that.

But cryptocurrency is a 'decentralized' form of money, which means that there is no organization controlling the funds. It’s actually overseen by the public. People like you and I. Every transaction made with cryptocurrency is written into a public record that anybody can see. There are thousands of computers all around the world that track this activity. So when you try to buy something with Bitcoin or Ethereum—the two most used digital currencies—these computers will collectively make sure you have enough to buy the item. This new system, and where the information is stored, is called a 'blockchain'.

Okay, so what is an NFT?

NFT stands for ‘non-fungible token,’ which clears absolutely nothing up.

A non-fungible token is a digital asset you can buy using cryptocurrency. An NFT could be an image, animation, song, video, tweet—pretty much any asset that lives online can now be sold.

To turn regular online content into an NFT, the asset needs to be minted, which is the word we use for officially adding the item into the blockchain. This creates a certificate of authenticity. Next, the creator will either set a fixed price or begin an auction for the item. When a buyer decides to purchase the item, it’s paid for in cryptocurrency and it gets deposited into the creator’s online account. The buyer then receives the file and the certificate.

But… why do people buy NFTs?

Good question.

Earlier this year, digital artist Beeple created a composition of 5,000 daily drawings and sold the .jpeg as an NFT for $69 million. But despite all this, his work can still be viewed with a simple Google search. So why do people spend millions of dollars on something they could screenshot or download for free?

Bragging rights, honey.

You might have the screenshot, but only one person owns the file. It’s the digital equal of owning a print of the Mona Lisa versus owning the original painting. Except instead of the Mona Lisa it’s a photo of a rock.

Some people also buy NFTs to support their favourite artists, or to get exclusive rights to use the image however they like. Online copyright law contains an awful lot of grey area—this is one way to avoid all that.

All in all, if you take one thing from this article, it’s that you should never underestimate the financial potential of a cat video. And that the future is here.

A Black man smiles at the camera.

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