(Reuters) – Non-fungible tokens (NFTs), a type of digital asset, have exploded in popularity this year, with NFT artworks selling for millions of dollars and musicians such as the Kings of Leon rock group embracing them for their latest album.
The trend is perplexing those who might wonder why so much money is being spent on items that only exist in digital form and can be viewed by anyone for free.
Here are some facts about NFTs:
WHAT IS AN NFT?
An NFT is a digital asset that exists on a blockchain. The blockchain serves as a public ledger, allowing anyone to verify the asset’s authenticity and ownership.
So unlike most digital items which can be endlessly reproduced, each NFT has a unique digital signature, meaning it is one of a kind.
NFTs are usually bought with the cryptocurrency Ether or in dollars and the blockchain keeps a record of transactions. While anyone can view the NFTs, the buyer has the status of being the official owner – a kind of digital bragging rights.