You’ve probably heard of NFTs by now.
It stands for non-fungible token, with the non-fungible bit meaning they’re unique and can’t be swapped out with a duplicate work.
Broadly speaking, they’re one-of-a-kind digital art. Unlike regular digital productions, though, they rely on cryptocurrencies and the blockchain to ensure they cannot be identically reproduced.
That’s NFTs in a nutshell. But, if you’re like many Aussie investors, you may not know how to go about valuing them. Or, indeed, why they have any value at all.
So, are NFTs a bubble awaiting a pin or the next big investment theme?
The answer could be a bit of both.
What was the first NFT?
To gain a broader insight into the risks and rewards of investing in NFTs, we turned to Ray Brown, market analyst at Australian crypto exchange CoinSpot.
First, we wanted to know how long they’ve actually been around.
Brown told the Motley Fool:
In 2012, Colored Coins hit the scene, and many still argue that they are the very first NFTs to exist. They’re made of small denominations of a bitcoin [Bitcoin (CRYPTO: BTC)], and can be as small as a single satoshi, the smallest unit of a bitcoin.
Colored Coins can be used to represent a multitude of assets and have multiple use cases including property, coupons, the ability to issue your own crypto, issue shares of a company, subscriptions, access tokens and digital collectables.
This was a big step for Bitcoin’s capabilities back then, which Brown said, “opened the door to further experimentation in applying blockchain technology for other purposes, laying much of the initial groundwork for NFTs”.
And Colored Coins look to have sparked a range of related work. According to Brown:
Closely after, a string of other similar projects followed, including the peer-to-peer financial platform Courterparty, Cryptopunks, Dapper Lab’s CryptoKitties, and Ethereum-based VR platform, Decentraland which lets players buy up empty parcels of 3D virtual…
