LAS VEGAS (KTNV) — There is yet another new technology that is sweeping across the internet and causing a cash craze involving some big name artists, athletes and collectors.
Non-fungible tokens, or NFTs, are emerging as a way to buy unique, digital files.
"Each token, the item could be a physical thing, it could be a digital thing, for example, like digital art, or digital music," explained Professor Rajiv Kishore from The University of Nevada, Las Vegas.
Kishore says the best way to understand NFTs is to breakdown the lingo.
Fungible means items are the same.
For example, a US $1 dollar bill.
There are millions of them circulating around, each one with a unique serial number.
However, each bill has the same value and can be used interchangeably.
"A dollar bill is exactly fungible," explained Kishore.
"Non-fungible means two things are not exactly tradeable, they are not the same value like a used car, your car and my car maybe different models, but even if it's the same model, they are not the same value," added Kishore.
Kishore says non-fungible tokens are, in essence, a digital title for things that are unique.
It is a unique way to identify a digital file which then allows for the item to be bought and sold.
"Jack Dorsey sold his first tweet for $2.9 million dollars," said Kishore.
The concept that digital things, like a tweet, can sell for seven figure sums may seem far-fetched but it is growing in popularity.
Tom Brady recently launched "Autograph" which bills itself as a first-of-its-kind, experience-driven NFT platform that brings together the most iconic brands and biggest names in sports, entertainment, fashion, and pop-culture to create unique digital collectibles.
Other NFT marketplaces, like Open Sea, also showcase digital files, mostly artwork, music and videos for sale.
"You're buying something from someone and they're saying they are the true owner of this and that thing has that value, so it's basically up to you to decide whether it has value or not," explained Kishore.
Kishore explains NFTs are sold using cryptocurrency, most commonly Ethereum, and use the same blockchain technology and public ledger idea.
Ethereum, the second largest valued cryptocurrency after Bitcoin, has soared in value and set recent records.
Kishore believes the possible uses for NFTs has not been fully developed yet.
"Right now, we're seeing very exotic, limited domain but ultimately, this is going to be a big technology," said Kishore.
Evenually, passports, driver's licenses and titles for real estate could be assigned NFTs to help streamline identification and transactions, Kishore predicts.
He points out the technology is so new there are no regulations, many legal questions and a need industries to catch fraud.
"Ultimately, trusted third parties have to come in and play a role, there's no question on that," explained Kishore.
There are a few things to keep in mind if you want to explore NFTs:
- Get a digital wallet that can accept and store cryptocurrency.
- Select and purchase cryptocurrency, again NFTs use Ethereum.
- Sign up for and brown an online NFT marketplace for items to either bid or buy.
- Buy an item and it is now yours and is stored in your digital wallet.
- It remains stored in the wallet until it is time to sell again.
Kishore sees a scenario where viral videos could be assigned NFTs and may be bought and sold and create millions of dollars in value.