Tuesday, May 28, 2024

The Art of Learning About NFTs

Digital art known as NFTs (Non-fungible tokens) have taken a dramatic turn to high popularity in recent times. Although they have been around for years, prices for NFT crypto art have soared to unthinkable numbers. Like traditional works of art, most of these digital pieces are one of a kind or at least a limited run on the quantity. These now precious digital assets include everything from works of art to beautiful music. It also includes pieces from Taco Bell tacos to Charmin’s toilet paper. Yes, even toilet paper has gone digital.

What is an NFT?

As previously mentioned, an NFT is a digital asset that represents real-world objects. Essentially, NFTs are the same as physical collector’s items, only digital. They can be bought and sold online through a crypto exchange using some form of cryptocurrency. NFTs are created much like a crypto currency on the blockchain however that’s about the only similarity. Each one has a unique digital signature which means it has its own value. That value can be whatever the creator decides.

Are NFTs safe?

NFTs are created and exist on the blockchain. Because of that, buying and owning one is about as safe as buying and owning any cryptocurrency. Overall, they’re fairly safe, but you should take appropriate steps to protect them like you would with any investment. You will need a secure wallet to store your NFT. Use due diligence in selecting a crypto exchange or wallet, this can have a big impact on the security of your asset.

How much do NFTs cost?

That’s the million-dollar question. NFT popularity continues to climb. In a recent article form Forbes Advisor, nearly $200 million dollars has been spent acquiring these digital art pieces. Not all NFTs require huge sums of cryptocurrency to acquire them. There are several out there for mere pennies. Some of the purchases that have been completed for huge dollar amounts are:

Beeple image courtesy of NYTimes.com

A collection of art by Beeple – $69 million

Hashmasks (another art collection) – $16 million

Grimes artwork and music videos – $6 million

CryptoPunk #3100 (an algorithm-generated pixel art image of an alien) – $7.58 million

A clip of Steve Aoki’s music and a dancing blue-and-purple figure – $888,888.88

This begs the question ‘why do people spend this kind of money on these digital assets?’. The short answer is because they can. Some consider it a status symbol. They want to show off their shiny new NFT to the world knowing theirs is a limited edition or one-of-a-kind.  Others look at it as another type of investment in hopes of growing in value. There is also a fiscal responsibility that goes along with these digital assets. Depending on where you reside, you could be hit with rather large tax liabilities.

Claire James
Claire Jameshttp://www.firedigitaluk.com
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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