The latest phenomenon in the investing world is the idea of non-fungible tokens, or NFTs, which represent a digital piece of artwork or other collectible online item. “Fungible” means something can be easily traded for something else of the exact same value. For example, a dollar bill is fungible because you can trade it for another dollar bill that’s worth the same amount.
A non-fungible item is a one-of-a-kind item that can’t be replaced by something else. NFTs allow someone to buy or sell a unique piece of digital art, and the buyer is the only one in the world to own that original piece.
NFTs are a new type of investment, but some have already sold for tens of millions of dollars — proving that they can be lucrative. But are they the right investment for you?
How do NFTs work?
NFTs are recorded on a blockchain, and each token holds information about a unique digital piece of art.
The types of art available as NFTs are virtually limitless. Twitter CEO Jack Dorsey recently made headlines for selling the first-ever tweet as an NFT for $2.9 million. An animated GIF of Nyan Cat, a 10-year-old meme, sold for more than $500,000. And digital artist Beeple sold a digital painting for a whopping $69 million.
NFTs become an investment opportunity when you consider the art’s resale value. Similar to buying physical pieces of fine art, owning the art itself isn’t necessarily the moneymaker — it’s selling that art to the highest bidder that brings in the big bucks. If you’re able to…