What is an NFT? and Why are people paying millions for an image of an ape?

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What is an NFT?

The most basic definition of an NFT (Non-Fungible Token) is digital evidence of ownership for a one-of-a-kind item.

For example, the U.S Dollar is “fungible”. This means a dollar can easily be swapped for another dollar since it has the same value.

While NFTs are “non-fungible” meaning they cannot be swapped with another NFT since they are one-of-a-kind items.

Let’s dive in further: Let’s say you have a pair of Sunglasses, one-of-a-kind sunglasses that were specifically made for you by Oakley. You also own an official certificate from Oakley that says, “There is no other pair like this in the world”.

In the same way that your sunglasses are non-fungible, NFTs are uniquely created digital assets (e.g. pictures, autographed items, GIFs, baseball cards, memes, and even tweets).

NFTs are appealing to collectors because they come with digital proof of ownership, proving that it’s genuine and original.

Why would anyone buy something they can’t even touch for millions of dollars?

Consider NFTs to be a niche market for high-brow digital-art collectors.

Virtual-art collectors see actual value in owning the original source of a scarce digital item, just as art collectors would pay top dollar for a one-of-a-kind.

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