NEW YORK — Sales of Bored Ape Yacht Club “non-fungible tokens” have gone past $1 billion, ramped up by celebrity collectors such as Eminem, prompting more questions than ever about what are NFTs and how do non-fungible tokens work?
Business Insider explained NFTs are digital representations of artwork or other collectibles tied to a blockchain — a digital record of ownership stored across many different computers — mostly on Ethereum’s network.
When people buy NFTs, they are buying the rights to a unique token within the blockchain.
These nonfungible tokens function as a place to store financial value, but unlike dollars or bitcoins, where equivalent individual monetary units have the exact same value, each NFT has its own distinct value, like an old house or classic car.
In the case of Bored Ape Yacht Club crypto art, for instance, there are 10,000 apes, each with different “properties” ranked in terms of rarity.
Behind this combination of digital art and blockchains is an attempt to create artificial digital scarcity: the blockchains are used to tie down digital assets’ origins, which allows ownership to be proven, and thus limited, which tends to increase value.
This ownership is not necessarily very wide ranging at all, with the artwork’s copyright, the right to make it available or unavailable to the world at large, often not a part of the token’s purchase, according to The Conversation.
But The Verge sums the concept’s apparent financial appeal like this: “anyone can buy a Monet print.
But only one person can own the original.”