Why Are They Blowing Up Now? Blockchain-driven decentralized finance, or DeFi, surged in 2020 as people moved away from the traditional financial system amid widespread distrust of institutions, common during recessions. But last year a recession coincided with the arrival of digital commerce like never before. That appetite was behind not only the Bitcoin boom but also other new blockchain-based financial ideas like NFTs, which took off after floating around for a few years.

 Tokenizing Your Content. Digital content is tokenized — or becomes an NFT — through a process called “minting,” which assigns a coin on a blockchain to any given work, authenticating as many copies the creators see fit. Anything can be made into an NFT, from a recipe to a song. However, to do so you need a crypto wallet and to have purchased some cryptocurrency as it costs to create an NFT, typically anywhere from $2 to $32 depending on the day’s “gas price.” Afterward, pairing your wallet to a marketplace listing an NFT is as simple as an upload.

Pitfalls. We’ve seen the boom-and-bust cycle before in the crypto market, such as initial coin offerings (when startups, many of which failed, issued digital tokens to raise money) that were scorching hot around 2017. So NFTs are no safe bet. Whether you want to look at Mark Cuban selling one of his tweets for $952, Lindsay Lohan selling an image of her face for more than $2,000 or actor/boxer/social media tycoon Logan Paul selling NFTs of himself unpackaging Pokémon cards for millions of dollars, the market is running amok in ways that don’t always make sense.

 CHANGING THE WORLD
Power to the (Digital) Artist. NFTs are revolutionary for artists and creators as they give them complete authority over their content, how to distribute it and who gets a cut. The smart contracts governing NFTs allow artists to retain a copyright and to earn a percentage of every sale, so they benefit as the value of their work rises. Digital artists are seeing a boom as their work finally has a chance to be collected in a way that previously was reserved for fine art. Next up? Musicians, who could leverage the platform to make far more than the per-stream pittance they get from the Spotifys of the world.

New Way to Invest. At a time when investors are looking beyond Bitcoin for the next big thing, NFTs have arrived. Entrepreneur guru Gary Vaynerchuk says he’s been waiting for this moment since 2010 and that the “next 36 months will be incredible,” as he uses his platforms to evangelize for NFTs. During a single day in February, NFTs generated more total sales than they did in all of 2020. But investing is not as simple as hopping onto a brokerage site. To purchase an NFT, you typically have to buy Ethereum cryptocurrency, then store it in a digital wallet like MetaMask — which comes with fees, so it can cost as much as $100 just to make a bid.

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