NFT means non-fungible token and can easily feel like a complex topic to wrap your head around. Crypto and NFTs are a new concept in the world of money and technology today. An NFT is just a special kind of cryptocurrency token that’s different from a regular or “fungible” token.
What does “non-fungible” mean?
A “fungible token” is an asset like Bitcoin or dollar bills, where each one is alike and worth the exact same amount. If you have a “fungible” asset, like a dollar bill, you can swap it out for any other dollar which holds the same value. So a “non-fungible token,” or NFT, means it’s unique and can be worth a different amount than any other token. Since each NFT is different than any other and verified in the crypto’s blockchain ledger, you can use it to prove you own an original digital asset.
Why are NFTs important?
NFTs have quickly exploded as a way to show the authenticity of digital products. In today’s world of tech, those products are becoming more popular and relevant than ever before. Most NFTs are held on the Ethereum blockchain, and you can use NFTs to verify ownership of all sorts of digital goods. Build a collection of digital assets or buy and sell NFTs like:
- Collectible artwork and avatars like CyberPunks
- Twitter founder Jack Dorsey’s first tweet
- Music clips and videos by music stars like Steve Aoki
- NBA digital trading cards
- Digital real estate in online worlds like Decentraland
What is an NFT used for?
As cryptos like Bitcoin and Ethereum have soared in value, NFTs have also become more popular and used in surprising ways. Your favorite music artist may release their next album in the form of an NFT. Since NFTs are stored on an open blockchain, anyone can track them as they’re created and sold. Smart contract technology can even allow artists to earn a percentage of sales every time the NFT is resold.
Why buy NFTs?
Since NFTs are increasing in popularity, more people are willing to pay higher prices to get them. You may be interested in NFTs to collect cool art or support a particular artist or brand. Or maybe you’ve seen how certain NFTs have skyrocketed in value when resold on the internet. Many NFT owners view their collections as investments that will go up in value over time, similar to investing in cryptocurrency. NFTs and crypto can be an interesting way to get your kids involved in the money conversation.
Read more articles about explaining crypto to kids here.