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What is NFT

test-course-leader February 22, 2023

In 2020, the entire NFT market was worth a little more than $200 million. This year? More than $12 billion in digital assets traded hands by the end of August, and industries from Hollywood and the music biz to fashion and big-league sports are investing in NFT projects. NBA Top Shot, for instance — which packages basketball highlights into digital trading cards — has redefined the idea of what a collectible is in the digital age. “Blue-chip” generative NFT collections like CryptoPunks (Jay-Z owns one, as does Visa) and Bored Ape Yacht Club (Steph Curry is a collector), have evolved from art projects into signifiers of membership in rarified clubs — complete with access to exclusive spaces and events.

But artists, in many ways, remain at the center of the NFT universe — because NFTs have transformed the basic economics of art markets by allowing creators to capture a percentage every time their work is resold. Imagine taking a photo, and getting a 10% cut every time it’s resold for the rest of your life. In the traditional art world, that’s impossible. With NFTs, it is quickly becoming the norm, because the smart contracts that power NFTs allow artists to set rules about how they’ll be compensated for their work — rules that remain in place long after the art leaves their hands.

If you want to get into collecting NFT art, most experts recommend buying pieces that you love as opposed to chasing the kind of eye-popping returns you may have read about — because digital art markets are still new and can be highly volatile. Doing your research is also key — a big part of the appeal of many NFT projects is the community that forms around them, so don’t be afraid to dive into the fan communities on Discord, Twitter, Reddit, and elsewhere.