What is an NFT?

If you’ve been looking for ways to invest your money, you might have heard that people are spending—and making--a lot of money on Non-Fungible Tokens, more popularly known as NFTs. Trying to figure out what NFTs are, though, can be confusing, since companies have made NFTs out of everything from a cartoon ape to the first Tweet on Twitter.

So what are NFTs? Where can you buy one? Even more importantly, can you make money on them?

NFTs Explained

As we mentioned, an NFT stands for Non-Fungible Token. Fungible is a legal term that means “interchangeable.” So an NFT is basically an item that you can’t substitute—In other words, it’s unique.

So far, so good. There are tons of other items in the world that you could also consider non-fungible, like artwork or first-edition books. The big difference is that NFTs only exist online.

That’s right, NFTs are basically versions of digital artwork. They can be static images, video clips, bits of text or anything else you can think of.

Of course, this leads to one big question: can’t anyone save an image from the Internet and call it theirs? They absolutely can, but the creators of an NFT use similar technology to cryptocurrency, including blockchains, which are blocks of code chained together on a spreadsheet.

The details are pretty complex, but the practical result is that when someone buys an NFT, they have proof that they are the legitimate owner. Other people may be able to have copies of the NFT, but only the owner will be able to verify that their version is the original.

This is really good news for content creators everywhere, since they can now monetize their digital wares. In fact, some digital artists have already made millions off their NFTs.

How do you Buy an NFT?

If you’d like to look into buying an NFT, the first thing you’ll need to do is visit an NFT marketplace. Plenty of them exist, but currently the three biggest NFT marketplaces are Rarible, OpenSea.io, and Foundation. All these marketplaces have their own sets of rules, but you’ll at least need to create your own user ID.

You’ll also need to buy some cryptocurrency. This will involve getting a digital wallet app on your smartphone, as well as making sure you buy cryptocurrency that the NFT marketplace you visit accepts.

Once you’ve taken both of those steps, all you have to do is buy an NFT that’s within your price range. You’ll have plenty of options available, and once you place your order, you’ll be the proud owner of an NFT.

Are NFTs a Good Investment?

Buying an NFT can be fun, but if you’re looking at it as an investment, you should know that the price of most NFTs can fluctuate a lot. Even more importantly, NFTs are so new that no one has a lot of history to figure out if an NFT will increase in price or not.

You should also keep in mind that the price of an NFT is completely based on what other people are willing to pay for it. In other words, if your NFT becomes really popular, you’ll be able to make a profit on it. If not, you might not even be able to find a buyer.

Prepare for Your Future With First Alliance Credit Union

Buying an NFT can be tempting, especially since it’s new and popular. However, their newness also makes them an extremely volatile investment. If you buy an NFT, there’s no telling whether the price will increase or plummet.

If you’re looking for a place to invest your money, First Alliance Credit Union has some excellent options available to all its members. You can put your money in a certificate of deposit or an IRA and monitor how much interest your money has earned

Become a First Alliance member today!