March 17, 2021
Are you sitting down? Because some memes are officially worth money. Lots of money.
And it’s not just memes. Digital art has exploded in value recently, leading some to scratch their heads and others to jump on the bandwagon.
Here’s how Non-Fungible Tokens, or NFTs, work, and why you should care!
At their core, NFTs are simple pieces of digital art. They range from illustrated portraits of punks to “CryptoKitties” to the influencer equivalent of Pokémon cards—vlogger Logan Paul made $5 million in a weekend by selling one-of-a-kind trading cards featuring animated versions of himself.¹
Think of an NFT as a combination of a bitcoin and a trading card. They exist digitally and are sold online, but their value is totally dependent on being originals!
Each one has a unique blockchain ID, making them impossible to duplicate or forge. You can know beyond the shadow of a doubt that the digital artwork you’re buying is the real thing.
That makes every NFT a rare one-of-a-kind. And limited supply cranks up demand.
Where did NFTs come from? They started in niche internet subcultures. But they’ve made their way closer to the mainstream. Some people have even started viewing them as investment items. It’s easy to see why—a CryptoPunk drawing recently sold for $69 million.² There’s always a (very very small) chance that the simple NFT you buy today could be a rare collector’s item in 5 years. But it could also plummet in value the day after you buy.
Realize that the NFT market is uncharted territory. Predicting which NFT will be valuable is nearly impossible. There’s nothing wrong with dabbling in digital art here and there. But it’s best to stick with more stable and time-tested strategies if you’re aiming to grow long-term wealth!
¹ “What Is An NFT—And Should You Buy One?,” Abram Brown, Forbes, Feb 26, 2021, https://www.forbes.com/sites/abrambrown/2021/02/26/what-is-an-nft-and-should-you-buy-one/?sh=7335a47824b2
² “Beeple NFT becomes most expensive ever sold at auction after fetching over $60 million,” Robert Frank, CNBC, Mar 11, 2021, https://www.cnbc.com/2021/03/11/most-expensive-nft-ever-sold-auctions-for-over-60-million.html