Blog: What are NFTs?
NFTs, or non-fungible tokens, are virtual tokens that represent ownership of something inherently distinct and scarce, such as a piece of art or music, and cannot be mutually exchanged. Essentially, buying an NFT is like buying a piece of art, only digital. Instead of owning a picture to hang on your wall, you own a digital file.
NFTs have quickly become one of the fastest growing types of digital asset, with investors seeking to own these unique, blockchain-based instruments. While NFTs have been around since 2014, they have continued to increase in popularity in recent years, with NFT sales reaching $25 billion in 2021.
NFTs Vs. Cryptocurrency
NFTs are typically built with the same programming as cryptocurrency, but that is the extent of their similarities. Cryptocurrencies are fungible, meaning they can be traded for one another. For example, one Bitcoin has the same value as another Bitcoin. All NFTs are unique, rendering them non-fungible, meaning two different NFTs will hold different values.
Cryptocurrencies are built using blockchain technology, which is a distributed public ledger that records transactions. NFTs typically exist on the Ethereum blockchain, although other blockchains support them as well.
NFTs are a way for artists to sell directly to the consumer without having to rely on a gallery to host their work. When they sell directly to consumers, artists keep all the profits, and can even elect to make royalties any time the NFT is sold to a new owner.