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Some predict that using the blockchain to record the ownership history of an item will eventually become much more widespread and revolutionize the way we think about property. (Representative image)NFTs have sometimes been sold online for astronomical sums, with big companies now joining the craze as the tokens find their way into everything from the art market to video games.

But what exactly are these digital assets and how are they traded?

– What is an NFT? – NFT stands for Non-Fungible Token.

Something that is “fungible” can be exchanged for an equivalent product – for example, a $ 5 bill for another $ 5 bill.

Cryptocurrencies that use a digital public record of transactions called a blockchain are fungible.

NFTs are digital items that can be bought and sold using this blockchain technology. However, they are not fungible, which makes them a different type of asset.

Some have sold for millions, including an NFT from digital artist Beeple that went under the hammer at Christie’s in March for a staggering $ 69.3 million.

Some of the most sought-after NFTs are published through collections of thousands of unique custom cartoons, such as the Bored Ape Yacht Club.

They are viewed as naturally cool by their owners, who enjoy showing off their purchases by displaying them as their social media avatars.

The tokens aren’t necessarily pictures, however: several websites such as Decentraland and The Sandbox allow you to purchase virtual land in NFT form.

Critics say investors spend money on meaningless items, but proponents insist that NFTs are much more than just digital jewelry.

Some predict that using the blockchain to record the ownership history of an item will eventually become much more widespread and revolutionize the way we think about property.

– How are NFTs traded? – Like cryptocurrencies, NFTs are bought and sold on specialized platforms. OpenSea is the most popular NFT marketplace.

A sale does not necessarily include the handover of the item depicted by the token.

For example, NFTs of famous paintings have been sold, but the buyer does not receive the painting.

What changes hands is a certificate of ownership by the NFT, which is registered on the blockchain. The certificate must be kept securely in a digital wallet, which can take various forms.

The wallet can be accessed through Metamask, a free internet browser extension, or a secure physical device. It can also be the simple form of a code printed on a piece of paper.

To buy an NFT, the wallet must contain enough of the corresponding cryptocurrency – for example Ether (ETH) if the person buys a token on the Ethereum blockchain.

With a little technical know-how, it is also possible to manufacture or “emboss” your own NFT.

Ultimately, NFTs are digital contracts that have certain rules embedded in them, such as the number of copies for sale.

– What are the risks? – Trading NFTs involves technical processes that are sometimes misunderstood – and that can leave investors unsure of what they are dealing with.

Every interaction with the blockchain is associated with fees for “mining” – the enormously energy-intensive computer calculations required to verify every transaction.

Thousands of users could rush to buy a coveted NFT as it is minted and they will have to pay the fees even if they come away empty-handed.

Some buyers use bots to make sure they can get their hands on a token, making the market even less accessible to new investors.

“A very small group of sophisticated investors are pulling in most of the profits from the NFT collection,” blockchain data company Chainalysis said in a recent report.

And it added that NFTs are often sold at a lower price to enthusiasts who helped create hype for the project.

“The data suggests that NFTs are far from a surefire investment,” concluded Chainalysis.

From art to fashion, the creative industries have quickly experimented with an innovation that has generated excitement and skepticism in the tech sector …

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1. What is NFT?
   NFT stands for Non-Fungible Token. NFTs are digital items that can be bought and sold using this blockchain technology. However, they are not fungible, which makes them a different type of asset.
2. How are NFTs traded?
   Like cryptocurrencies, NFTs are bought and sold on specialized platforms. A sale does not necessarily include the transfer of the object represented by the token. For example, NFTs of famous paintings have been sold, but the buyer does not receive the painting.