- You may have heard the acronym NFT swirling around these days.
- Cryptocurrencies and cryptographics have become popular in recent years.
- If you’re going to buy NFTs, make sure you do your research.
What is an NFT (besides yet another new acronym to learn)? You may have heard of NFTs, as they’ve been popping up more and more in conversation and a variety of articles. With so much interest in them, it’s a good idea to have an understanding of what they are.
NFTs are non-fungible tokens and they are part of blockchain technology – think Bitcoin or Ethereum cryptocurrencies. There are cryptocurrencies whose blockchains support NFTs, which are unique, easily verifiable, digital assets. These can be GIFs, images, videos, or anything that can be done digitally, within reason.
In this sense, NFTs are more like cryptographic tokens than cryptocurrencies. The difference is that whereas cryptocurrencies are fungible (in other words, interchangeable – you can substitute one bitcoin for another bitcoin), NFTs are distinct and different from each other, unique on the blockchain. You might think of them as one-of-a-kind artworks or limited edition trading cards.
Now, you may be asking why you’d want to own an NFT. They are, in one way, an emotional purchase. The first ones that came out were CryptoKitties, the 1980s equivalent of which might have been Cabbage Patch Kids. Those dolls were a huge trend and people went out of their way to purchase them. With CryptoKitties, people feel there’s a value to them – and when others also feel there’s value to them, selling and trading occurs, with people making money along the way.
Which brings us to a second reason people purchase NFTs. Yes, you can buy an NFT and make money when you sell it, assuming that the value of that particular digital asset goes up in the mind of somebody else.
This is a whole new arena. There are a variety of platforms available to do this, if you’re looking to buy NFTs. But you will likely need to do a bit of research, so make sure you spend some time learning about them to understand how they work before diving in. Until next time, enjoy.
If you’d like to read more on this topic, here are a few of our past Coyle Blog posts that you might enjoy:
Gary Klaben serves as a Financial Advisor, and visionary for Coyle Financial Counsel. He has over 30 years of experience and is the author of Changing the Conversation, Wealth of Everything and co-author of The Business Battlefield. Whether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.
Learn more about The Coyle Process, approach designed to get your arms around the big picture, so you can make informed financial decisions. Ask Gary about The Coyle Process and schedule a complimentary consultation and start living the Good Life Managed Well™.
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