The acronym NFT has been in the media a lot in the last year. With more of us at home and the US government supplying stimulus money, people have been looking for something to do and ways to make money. Enter in the NFT. The question is, what is an NFT and how do they work?
What is an NFT?
NFT stands for non-fungible token. Non-fungible means that it’s unique and can’t be replaced by something else of similar value. For example, if you had a $10 bill, but wanted change, there are two different ways to get $10 in change. Currency is fungible because it can be exchanged for a different type of currency of similar value.
NFT’s are part of the blockchain (most popularly the Ethereum blockchain). Ethereum is a cryptocurrency. Ethereum differs from the “mainstream” Bitcoin because it is open source, which means it can be edited, updated, and/or improved upon.
NFT’s can be used to sell digital art (music, photos, videos, etc.).
How’s it work with the artist?
NFT’s could give artists a more significant piece of the pie when selling their work. Right now, most of the profit goes to middlemen/women. Authentication in the form of NFT would enable the artist to participate more in the revenue sharing of their work.
On the other side of that coin, if you’re buying NFT’s, you have the ability to support your favorite artists. Also, owning the NFT is akin to owning the original. You’re able to “use” it without the fear of being sued for copyright infringement. The “proof of work” for owning the NFT is recorded on the blockchain.
All that being said, owning an NFT just means you own the original version. There can and will be copies of that thing on the internet. Copies can be made much more easily than if those things were in the physical world.
What to watch for
You need to be careful when you are bidding for NFT’s. Someone can create an NFT that’s a copy of an original NFT. Hopefully, though, the questions when creating the NFT weed out the copies and “fakes”.
Additionally, blockchains and cryptocurrencies use an extraordinary amount of energy. The carbon footprint created by mining a single Bitcoin is ginormous (Source).
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