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NFTs: What are they and why are they suddenly worth millions?

NFTs are taking the internet and art world by storm. And filling the internet with more cats.

HARRISBURG, Pa. — The internet is full of cats.

This one, named Nana Meanbutt, just sold for $155,545, according to Nonfungible.com.

Credit: Cryptokitties.co
Nana Meanbutt, owned by Krakitten

Meanbutt is a CryptoKitty, a cryptocollectible that’s part of the exploding NFT trend.

NFT stands for non-fungible token.

Let’s break that down.

Non-fungible means it’s unique and can’t be replaced with something else. Think of it like a super rare trading card that you couldn’t find anywhere else, versus a bitcoin, which you could trade for another identical bitcoin.

The token part is the digitalization of something through an encrypted blockchain. In the case of NFTs, it’s usually done on the Ethereum blockchain. Ethereum is a cryptocurrency currently trading at 1 Ether to $1,470.99.

An NFT could technically be anything digital, like music, a social media post or a video clip.

Right now, though, the hype is centering on digital art: one-of-a-kind pieces, authenticated pieces.

For example, a 10-second video by Beeple, a digital artist whose real name is Mike Winkelmann, sold for $6.6 million on Feb. 24.

So what’s to keep you from downloading the same file for free?

Well, nothing.

“There is no concept of ownership in the digital world, if you think about it,” said Farooq Anjum, an associate professor at Harrisburg University who specializes in artificial intelligence and blockchain security.

There’s no clear consensus on who owns a meme, gif or other digital asset of unknown origin.

The point of NFTs, meanwhile, is owning the original.

“It’s like you owning the Mona Lisa as opposed to you looking at the Mona Lisa,” Anjum said.

Some people are breaking the bank to get their piece of the digital pie.

The famous Nyan Cat of 2011 was remastered and sold Feb. 19 for 300 Ether, about $462,954.

CryptoPunks, a series of 10,000 highly pixelated characters, sell for an average of $16,792.

Credit: Larva Labs
CryptoPunks by Larva Labs

Is the trend here to stay? Probably. But experts said some technical issues with uploading and ownership need to be sorted out first.

“The gap when going from the non-blockchain world to the blockchain world has some challenges and they need to be addressed before I would feel comfortable with NFTs,” Anjum said.

Cryptocollectibles like NFTs will become more mainstream in time, Anjum said.

For now, they’re redefining creative ownership and digital authenticity.

And uploading even more cats to the internet.

Credit: OpenSea.io
Cat #3, owned by Turspro