| Hi Taylor:
I finally gave in and looked up NFTs. I guess the letters stand for
Non-Fungible Token, and I'm probably more confused than before I did
the research. Can you break this new trend down for me? - Marty
Hi Marty: I'll do my best! NFTs are surging in popularity
along with the crypto boom, though we've been experimenting with and
gaining understanding about cryptocurrency for over a decade so it's
easier for us to wrap our minds around that one. I'll give a basic
rundown, and I apologize in advance if this doesn't clarify anything.
We can make sense of the words "token" and "non," so it's really
the "fungible" that makes NFTs a head scratcher. In simpler terms,
it means something that can't be replicated. The reason people
care and so much money is flying at NFTs, is that people are figuring
out the digital version of an original Monet. Spend enough money
and you are the only person in the world to own a specific graphic,
video, GIF, etc. People might be able to create a visual replica,
just like with a painting, but you're the only one with the proper
coding that makes it a unique part of a certain blockchain (almost
always through Etherum at present).
2. What can an NFT be? The answer to this question is why
the concept might never make sense to some people. Anything can
be an NFT, as long as it's able to live in the blockchain. Music,
a crypto coin, digital art, a YouTube video, a Google document.
Online artwork is making the biggest waves, as the idea is that
this will be the next big thing in art collecting. The blockchain
coding that serves as proof of ownership has people thinking this
will be a safe way to invest in original pieces even if it's incredibly
easy to make a billion copies of the piece. The speculation has
its hooks in people, and digital art from creators you've probably
never heard of has been selling for many, many millions of dollars.
3. Passing fad or here to stay? As weird as the NFT concept
might seem, it can't be shrugged off. The amount of money these
tokens have already generated means there's value to the idea.
If people are spending that kind of money, it means there's no
shortage of attention, and while we might not have discovered
the truest value of NFTs, the process will keep getting refined
and eventually take hold on a large scale. I don't think you should
empty your bank account to buy a specialized video made by your
favorite YouTuber, but I think we should all keep an eye on this
new financial arm of the blockchain.
| I'm guessing
you'd still have a hard time explaining an NFT to someone else, but
hopefully I've made you a little less confused. Thanks for asking!
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an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
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