WTF is an NFT?

So glad you asked—especially because after a record-breaking NFT auction at Christie’s (with a $69 million payout), we should all understand what’s happening. Basically, NFT stands for “non-fungible token”—but it’s not something you use to play air hockey at Chucky Cheese. Meaning you couldn’t exchange one NFT for another — that run on a blockchain network, a digital ledger that records all transactions of cryptocurrencies like bitcoin.

The difference with bitcoin and other tokens, though, is that each NFT is unique and can’t be replicated. Each one accrues value independently. Crypto investors say NFTs derive their value from how scarce they are. They’re stored in digital wallets as collectors’ items. Beyond art and sports, people have also found uses for NFTs in virtual real estate and gaming.

These tokens represent the code of a unique digital asset—like, the HTML (code) magic behind the rainbow GIF cat. Other recent NFTs include the first-ever tweet, footage of a burning Banksy, and a Kings of Leon album, which are all fetching big $$$.

JPG File Sells for $69 Million

A work called Nyan Cat by Chris Torres sold for $590,000 recently. It's part of growing interest in digital assets, known as nonfungible tokens, or NFTs, that are generating millions of dollars in sales every day.

But why can’t you download this stuff for free? As crypto expert Donna Redel explains, “The thing you're buying is [the original] code… You're buying a different format of art.” (Just like the actual Picasso at the Louvre is worth way more than the poster of it from your college dorm, even though it’s the same image.)

So now that you know, go forth and build your wealth by learning some computer science… or, you know, investing in companies led by women. Or both?

What are your thoughts about NFTS? Post a comment below.