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What Are NFTs?

Let’s start with the basics. The term NFT stands for “Non-Fungible Token.” Put simply, it is a unique digital record, stored on the blockchain (predominantly Ethereum), that provides proof of ownership of a specific digital asset. This could include ownership of anything like a jpg, a video, an audio file, or really any other type of digital file. Some popular examples include the NBA, which sells NFTs of video clips of basketball games. Or digital artist Beeple who famously sold his art for $69 million in an auction.

1. As an investment

The scarcity aspect of NFTs has led them to become collectibles, and historically their value increases after the initial sale. Similarly to buying a piece of art as an investment, people hope and expect the value of their NFT to increase.

2. For a certain utility or access

For example, some NFTs are sold as part of a collection with exclusive access to a community. By buying an NFT from the collection, you get access to the community. NFTs could also provide access to real-world events and items. One example I have to share because they’re one of my favorite bands is Kings of Leon, who released their album last year as an NFT. Anyone who purchased it gained access to special perks, such as limited-edition vinyl or future concert tickets.

3. People genuinely value the art

Some people simply value quality artwork that stands out to them. If you buy NFT art, you now own a piece of art and can even display it in real life via digital screens.