NFTs FAQ

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What is an NFT?

Non-fungible tokens, or NFTs, are unique digital assets on the blockchain that enable the creation, monetization, and trading of traditionally illiquid valuables such as artwork, real estate, and music. NFTs can be considered virtual certificates of authenticity. For more information, read What Is a Non-Fungible Token (NFT)?

What are some of the most well-known NFT projects?

The Bored Ape Yacht Club (BAYC), a collection of NFTs that sits on the Ethereum blockchain, was one of the most well-known NFT projects of 2021, experiencing more than $1 billion of trading volume since its inception. Similarly, CryptoPunks are popular NFT collectibles of pixelated avatars. For more information, read Nonfungible Tokens: A New Frontier.

How are NFTs different from other digital assets?

Digital assets, such as cryptocurrencies and asset-backed tokens, are interchangeable because their financial worth is the same for all holders. For example, like the U.S. Dollar, one Bitcoin equals another Bitcoin. NFTs are singular and unique, which means that each NFT is valued independently of other NFTs. For more information, view our Digital Asset Taxonomy.

How do NFTs drive investment value?

An NFT can be likened to a wrapper or a vessel. The wrapper represents the investment structure, but the value of an NFT is defined by the asset contained within the wrapper. Given that NFTs are unique items, their financial worth is determined by perceived, intrinsic, and functional valuation. For more information, view our webinar, NFTs for Professional Investors.

What makes NFTs different from JPEGs?

A JPEG is a format for virtual image files that can be infinitely copied and shared on the internet. Blockchain enables content authentication using smart contracts and tracks its circulation for continuous remittance to the original creator. For more information, read What Are NFTs?

What are in-game NFTs?

The gaming industry has integrated competition and consumable goods to attract and retain players. One example is Fortnite, where players can gain a competitive advantage by using microtransactions or digital purchases that unlock specific gaming features. Blockchain-based gaming has enabled the creation of digital, non-fungible, in-game assets that can be collected or traded. Players will therefore have opportunities to own unique assets versus items that are the same for all participants. For more information, read In-Game NFTs You Should Know About.

What are NFTs’ biggest value propositions?

A JPEG is a format for virtual image files that can be infinitely copied and shared on the internet. Blockchain enables content authentication using smart contracts and tracks its circulation for continuous remittance to the original creator. For more information, read What Are NFTs?

What are some current use cases of NFTs?

Music NFTs have been rising in popularity, enabling artists to monetize their work and receive direct support from fans without interference from music labels. For example, Grimes released a 2021 NFT collection of original art paired with her songs, one of which sold for almost $400,000. NFTs have also been used in the sports industryproviding digital sports trading cards, expanding brand partnerships, and deepening connections between famous players and their fans. For more information, read Top 7 NFT Use Cases.

How do NFTs help creators monetize their work?

NFTs are minted on a blockchain; thus, they are transparent and immutable. Using smart contracts, NFTs can be programmed to provide payment back to the creator when they are traded or consumed. For more information, read Next-Generation Securitization: NFTs, Tokenization, and the Monetization of “Things.”

What are future use cases for NFTs?

NFTs may be used for events and ticketing, which could merge concert admissions with artwork, memorabilia, and other VIP privileges, even allowing audience members to become concert shareholders. Another potential use case lies in the Metaversewhere participants could use NFTs to purchase sections of virtual land, stimulate a virtual economy, enter private parties, and upgrade their avatars. Further, NFTs provide opportunities to digitize certificates and other forms of identification, such as college diplomas, social security numbers, and account logins. For other future use cases, see 15 NFT Use Cases That Could Go Mainstream.

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