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Cryptocurrency explained: What is an NFT?

Updated: Apr. 21, 2021 at 5:39 PM EDT
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COLUMBIA, S.C. (WIS) - Cryptocurrency has been the buzzword in the tech and finance world and NFT’s have become a part of a new way to make money online. But what is it and why are people buying these expensive digital collectable?

First, “NFT” is short for non-fungible token. “Non-fungible” means that the item is unique and can’t be replaced with something else.

The concept revolves around the idea that you own a digital asset such as photos, videos, audio, and other digital “items” with a blockchain-based certificate of authenticity.

However, just because you own the NFT, doesn’t mean you own the copyright. The item can still be shared and posted online.

“You’re issued a token that represents something, like, for example, the rights to a music track that you do. You make a cryptographic proof, issue a token on that, and now anytime someone in the world uses this track, you have a smart contract that actually tracks who uses it…and keeps track of the rights & royalties which get distributed to the artist.”

Rob Viglione is the co-founder and CEO of Horizen Labs, as well as the co-founder and team lead of the Zen Blockchain Foundation, who says that NFT’s right now have two main schools of thought: one that revolves around the “collectable” aspect like music rights or GIFs, the other that is beginning to emerge, focusing on consumer-based experiences.

“Companies are going to be using these NFT’s like crazy…to get foot traffic in stores, to introduce customers to things, participate in businesses, win special prizes. In a way, it’s kind of like a loyalty program on steroids.”

To buy an NFT right now, not only would you need a cryptocurrency wallet, but you also should have some spare cash. Earlier this month a piece of digital art made by Beeple sold at a Christie’s Auction for nearly 70 million, but the idea behind NFT’s won’t be relegated to the tech-savvy millionaires for long.

“There are so many big enterprises coming to the space...this is how it will go mainstream…you’re going to buy your coffee with it and it will look like a dollar on your app…you won’t even notice that it’s not coming from a bank but instead being debited by a smart contract with cryptocurrency collateral.”

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