What are NFTs (non-fungible tokens)?

In February 2021, the Nyan Cat meme sold for $600,000.

Twitter's founder Jack Dorsey auctioned off his first Tweet for $2.5 million.

What do these things have in common?

They're called NFTs — non-fungible tokens. They don't exist in the physical world and have become extremely valuable.

A NFT (non-fungible token) is data added to a file that creates a unique signature. It can be an image file, a song, a tweet, a text posted on a website, a physical item, and various other digital formats.

This means that someone can own a digital file that it's marked with code to differentiate it from any digital replicas.

Luiz Octávio, CEO and founder of Dux Cripto, worked on the development of NFTs and explains that the technology "is a form of decentralized certification."

NFTs give people a way to have clear ownership over digital items. Consider how they're the same and different from a physical object, like collectible cards (Pokemon, NBA, etc).

Collectible cards

• Collectible physical items

• Value changes based on what other people are willing to pay

• Security feature: holographic stickers, special paper, and other hidden elements

• You can buy, sell, trade, or give cards to anyone quickly

NFTs

• Collectible digital items

• Value changes based on what other people are willing to pay

• Security feature: unique data added to a digital work

• You can buy, sell, trade, or give NFTs to anyone online, but a network of computers must verify the trade and the unique data

Like real estate, fine art, and other cryptocurrencies, the biggest risk for NFT investors is whether the items will keep their value or not.

Thousands of NFT sales worth millions of dollars in total value are traded each day. Although some NFTs may go for millions, most don’t even break $200.

Token holders may get stuck with NFTs if their popularity declines and people stop wanting to buy them.

Photo by TabTrader.com on Unsplash

NFTs, (like all cryptocurrencies) have a large impact on the environment. NFT transactions must be verified through Blockchain to guarantee the encryption is valid, which consumes enormous amounts of energy.

The creation of an average NFT has a carbon footprint of over 200 kg — about the same as driving 500 miles in a typical American gasoline-powered car.

Apply this information in your daily life!