Are you familiar with NFTs? If not, this tip explains a little bit about what they are, why they seem so appealing and some things you should consider before purchasing any. 

Helpful resources about NFTs:

https://ethereum.org/en/nft/ 

https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq 

https://www.forbes.com/advisor/investing/nft-non-fungible-token/ 

https://www.investopedia.com/non-fungible-tokens-nft-5115211 

https://www.wsj.com/articles/bored-ape-nfts-so-expensive-11645709606 

Popular NFT marketplaces: 

https://opensea.io/

https://rarible.com/

https://foundation.app/

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Transcript:

Welcome to Money Tip Tuesday from the Making Money Personal podcast. 

There’s so much buzz around the internet and in the press about NFTs.  

You’ve probably read stories or watched videos of people buying some for millions of dollars. Even companies are hopping on the bandwagon to make and launch new collections every day.  

If you’re not familiar with what they are, this tip can offer you more insight into these unusual assets.  

So, for starters, let’s explain what the word NFT means.  

NFT is an acronym that stands for Non-Fungible Token.  

A quick search in Google defines fungible as something that’s “able to replace or be replaced by another identical item; mutually interchangeable.” Fungible assets can be exchanged for the same value – things like crypto coins and dollar bills are widely considered fungible. 

Non-fungible means an asset is one of a kind. It’s not mutually interchangeable. It cannot be replaced or exchanged for something identical. Think of a piece of priceless art or real estate. These assets have an individuality that can’t be duplicated.  

Historically, assets have been physical objects, something you can touch, or hold in your hand, but now, with NFTs, assets can go digital.  

NFTs can be any file like a JPEG, PNG, an audio file, or video files.  

You’ve probably seen some of the most popular collections floating around like the Bored Ape Yacht Club. The digital graphics show a bored looking ape in different themes and dressed in different outfits.  

Well, believe it or not, one of these sold for $1.29 million. 

If you explore the popular NFT marketplaces, you’ll find all kinds of other types of NFTs. Some are animated files where the characters move. Others are video clips, created or recorded.  Some are even digital land plots for gaming platforms like Minecraft.  

What’s so appealing about them? Who would spend millions of dollars on a digital file? Especially when you can easily right click the image and save it to your computer?  

Well, the key lies in the technology behind NFTs. They run on the Ethereum network and use blockchain ledger technology which verifies the file is the original and not a copy. There is a lot more computer science explanation behind how this works, which we won’t cover here, but if you’re interested in learning more about blockchain technology, YouTube offers a plethora of videos to watch and you can read all kinds of online articles about it.  

The gist of it is, NFTs provide a digital authentication record that you’re the NFT owner. Even though the image can be copied, your NFT contains data proving that you have the original.  

Think of it as you would if you were collecting a piece of physical art. You can buy a copy of DaVinci’s Mona Lisa painting, but it’s not the same as owning the original piece.  

The proof of ownership verified through the technology behind NFTs enables the file to be bought and sold like any physical asset would be. And this gets appealing to anyone interested in making money off selling certain types of assets.  

The major appeal for many people is that they imagine they can make millions. And if you’ve read the stories, watched the videos and