You might still not fully understand what an NFT is, I myself had to read a bunch of articles to really figure out with time what was a “Non Fungible Token” and how to make it more simple to understand. I am going to try to popularise this topic for non specialist readers.
Remember the end of the 20th century, around 1999-2000 when buying packs of Pokemon cards was every kid dream with their pocket money ? I would be one of them, trying to get the most rare ones to have them all in my dedicated card folder. They were of course physical cards, the size of a card game and they were not unique but some of them were pretty rare. Well NFTs are the modern digital version of these. As simple as it sounds.
I am not sure outside of Pokemon online games, NFTs of these card exists yet. But I am pretty sure its licensing company, Nintendo, is planning on releasing them soon or late, either in their own metaverse or on a dedicated marketplace.
A NFT can be anything from a unique piece of art, a copy of an existing piece of art, a copy of a card (like Pokemon cards would be, or Magic cards etc…), a GIF, a song, an item for a video game, a piece of land (yes you can buy a piece of land in a metaverse).
As for today, there is already a craze among generation Z for those digital items. They are literally spending all their pocket money into it, and the richest one are spending crazy amounts into it.
But not only the gen Z but any big players of the crypto craze is already buying them, as well as bunch of high net individuals like artists who are getting attracted by this new world of possibilities.
As I was saying in one of my recent article about the Metaverse, these items are the things you will be proud to show your friends on Instagram in the future. It will not be you new crazy expensive watch, it will be your digital monkey that you bought for the crypto money equivalent of $10k.
I am mentioning the metaverse because in fact since it’s a digital asset you can only show it to people in for example online art galeries on the metaverse. I am not sure yet there are companies offering in real life displays of NFT’s that you own but this might become in the future a product that everyone will own to be able to show their recent acquisitions.
You also have to understand that the those assets are localized on a blockchain, and that the blockchain is keeping tracks of who owns this particular item. Blockchain is also already a complicated thing to understand, to give you an example, let’s say the blockchain is like an online database, that keeps tracks of all data and connect those date on a chain of blocks. You can not modify an existing block but you can add a new one containing for example a new NFT. ( in reality blockchain is way more complex)
So you are wondering probably, what are they buying and why are they buying something that is fully digital and that has no value but the one people are ready to pay for ? Well it’s exactly like those Pokemon cards, their real value is almost nothing but the price people are ready to pay for the rarest one is crazy.
And also it is a fashion trend and also surely the desire to own something unique that may very well increase in value in the future, a form of investment. Also with the new developments of metaverse, a totally new system of artefacts and assets is being developed.
For example the new players of the Sandbox game (link), which is using the $SAND token, to be able to be among the first players of the full game you have to buy on Open Sea an “Alpha pass” which is available for 2,76 Ethereum or $13 083,86 (link).
Just Yesterday, a piece of land of the metaverse of the sandbox was sold more than $4 million (link). Knowing that it’s only the beginning of Metaverses and that 99% of people probably don’t know anything about it yet, the potential is probably HUGE, but still with it’s a super high risk investment for something 100% virtual.
Of course NFTs are far from being perfect, first of all there is an issue of licensing since anyone can copy any piece of art and sell it as if he/she was the artist who made it in the first place. Marketplaces and buyers will have to be vigilant before buying and making their own research on whether or not this NFT they are buying is a legit one.
Also blockchain is well known for not being the most environmental friendly technology with all the power it needs.
There are security concerns as well, since you digital assets are located on a dedicated online wallet, there will always be at risk of being stolen by hackers.
And of course, as I was mentioning it on the article about the ugly reality of metaverse, people will probably tend to hide in the VR world if their “real life” is not as good as it can be in their dreams, risk of addiction are high.
Open Sea one of the largest NFT marketplace : https://opensea.io