What are NFTs and why are some value millions?

A digital-only artwork has sold at Christie’s public sale house for an eye-watering $69m (£50m) – but the profitable bidder will not obtain a sculpture, painting or even a print.

Instead, they get a singular digital token known as an NFT.

The place Bitcoin was hailed as the digital reply to currency, NFTs at the moment are being touted as the digital reply to collectables.

However there are plenty of sceptics who think it is all a bubble that’s going to burst.

What is an NFT?

NFT stands for non-fungible token.

In economics, a fungible asset is something with units that may be readily interchanged – like money.

With cash, you may swap a £10 note for two £5 notes and it will have the identical value.

However, if something is non-fungible, this is impossible – it means it has unique properties so it can’t be interchanged with something else.

It could be a house, or a painting such because the Mona Lisa, which is one among a kind. You can take a photograph of the painting or buy a print however there will only ever be the one unique painting.

NFTs are “one-of-a-kind” assets in the digital world that may be bought and sold like some other piece of property, but they have no tangible form of their own.

The digital tokens can be thought of as certificates of ownership for virtual or physical assets.

How do NFTs work?

Traditional works of art comparable to paintings are valuable because they are one in all a kind.

But digital files may be easily and endlessly duplicated.

With NFTs, artwork will be “tokenised” to create a digital certificates of ownership that may be purchased and sold.

As with crypto-currency, a file of who owns what’s stored on a shared ledger known as the blockchain.

The records can’t be cast because the ledger is maintained by hundreds of computer systems across the world.

NFTs can even contain smart contracts that may give the artist, for example, a cut of any future sale of the token.

What’s stopping individuals copying the digital artwork?

Nothing. Millions of individuals have seen Beeple’s artwork that sold for $69m and the image has been copied and shared countless times.

In lots of cases, the artist even retains the copyright ownership of their work, so they can continue to produce and sell copies.

However the purchaser of the NFT owns a “token” that proves they own the “unique” work.

Some folks compare it to buying an autographed print.

Persons are paying millions of dollars for tokens?

Yes. It is as wild as it sounds.

How a lot are NFTs value?

In idea, anybody can tokenise their work to sell as an NFT but curiosity has been fuelled by recent headlines of multi-million-dollar sales.

On 19 February, an animated Gif of Nyan Cat – a 2011 meme of a flying pop-tart cat – sold for more than $500,000.

A couple of weeks later, musician Grimes sold some of her digital artwork for more than $6m.

It isn’t just artwork that is tokenised and sold. Twitter’s founder Jack Dorsey has promoted an NFT of the primary-ever tweet, with bids hitting $2.5m.

Christie’s sale of an NFT by digital artist Beeple for $69m (£50m) set a new record for digital art.

But as with crypto-currencies, there are concerns about the environmental impact of sustaining the blockchain.

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