Non Fungible Tokens, NFTs for short, are currently in high demand and are traded for a lot of money. But what is it anyway? Did you also know that you can save NFTs on crypto wallets like Metamask and Coinbase (see the Metamask vs Coinbase wallet for NFT comparison here)? We asked a digital expert.
At the latest since the digital artwork “Everydays” by Beeple was auctioned for 69 million dollars, everyone has been talking about Non Fungible Tokens, called NFTs. The luxury fashion brand Hermès has sued NFT creator Mason Rothschild for selling digital images of the well-known handbag “Birkin Bag” without permission. We asked digital expert Jean-Claude Frick from Comparis what NFTs are all about and whether it’s worth investing in.
What is an NFT?
“An NFT is a non-interchangeable digital part that has value,” Frick told ArgoviaToday. Digital goods could thus be made unique, which allows them to be sold. Simply put, an NFT is a kind of digital title deed. “An NFT doesn’t always have to be an image. It can also be a tweet, a piece of music, an e-mail, or anything else that is in digital form,” explains the digital expert.
How does NFT protection work?
In order for the NFT to receive a certificate of authenticity, it must be encrypted with blockchain technology, according to Frick. The blockchain is a kind of database that is publicly accessible. “In this way, every change can be made visible, which guarantees that an NFT remains unique and is not copied or adapted,” says Frick. NFTs are therefore technically related to cryptocurrencies such as Bitcoin. With both, the blockchain watches that everything goes to and fro with the right things.
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Where to buy NFTs and how to imagine owning an NFT?
You can buy NFTs on marketplaces such as Open Sea. If you have purchased an NFT, it can be stored – analogous to cryptocurrencies – in a digital wallet. These can be apps as well as USB sticks.
Why are NFTs so in demand?
According to Frick, the hype surrounding NFTs is related to their uniqueness: “Digital goods, which in principle can be reproduced indefinitely, can be made unmistakable thanks to NFTs. Everything that is unique automatically has value.” NFTs have also become sought after as an investment due to the boom in cryptocurrencies. “The expensive NFTs, which are auctioned off via auction houses, is above all a toy of the rich who do not know where to put their money,” says Frick.
Should I buy an NFT?
Similar to stocks, when you buy an NFT, you can hope that its value will increase, which will allow you to resell it more expensively. However, the NFT market is not certain. “The risk with such an investment is very high, as the market is confusing and new,” says Frick.