<p>NFTs have sometimes sold online for astronomical sums, with major companies now joining the craze as the tokens find their way into everything from the art market to video games.</p>.<p>But what exactly are these digital assets, and how are they traded?</p>.<p>NFT stands for Non-Fungible Token.</p>.<p>Something that is "fungible" can be exchanged with an equivalent item -- for example, a $5 bill with another $5 bill.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/technology/melania-trump-is-releasing-an-nft-that-will-cost-1-sol-each-1061734.html" target="_blank">Melania Trump is releasing an NFT that will cost 1 SOL each</a></strong></p>.<p>Cryptocurrencies, which use a digital public record of transactions called a blockchain, are fungible.</p>.<p>NFTs are digital items that can be bought and sold using this blockchain technology. But they are not fungible, making them a different type of asset.</p>.<p>Some have sold for millions, including an NFT by digital artist Beeple which went under the hammer at Christie's in March for an eye-watering $69.3 million.</p>.<p>Some of the most coveted NFTs are released via collections of thousands of unique individual cartoons, such as the Bored Ape Yacht Club.</p>.<p>They are seen as intrinsically cool by their owners, who enjoy boasting of their purchases by displaying them as their social media avatars.</p>.<p>The tokens aren't necessarily images, though: on several websites, such as Decentraland and The Sandbox, you can buy virtual land in NFT form.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/adidas-joins-rush-into-metaverse-with-nft-collection-1061615.html" target="_blank">Adidas joins rush into metaverse with NFT collection</a></strong></p>.<p>Critics say investors are spending money on meaningless items, but supporters insist that NFTs are much more than digital trinkets.</p>.<p>Some predict that using the blockchain to record the ownership history of an item will eventually become much more widespread, revolutionising how we think about property.</p>.<p>Like cryptocurrencies, NFTs are bought and sold on specialised platforms. OpenSea is the best-known NFT marketplace.</p>.<p>A sale does not necessarily involve the transfer of the object depicted by the token.</p>.<p>NFTs of famous paintings have been sold, for example, but the buyer does not receive the painting.</p>.<p>What changes hands is a certificate of ownership of the NFT, registered on the blockchain. The certificate must be kept safe in a digital wallet, which can take various forms.</p>.<p>The wallet might be accessed via Metamask, a free internet browser extension, or a secure physical device. It might also take the simple form of a code printed on a piece of paper.</p>.<p>To purchase an NFT, the wallet must contain enough of the relevant cryptocurrency -- for example, ether (ETH) if the person is buying a token on the Ethereum blockchain.</p>.<p>With a little technical know-how, it is also possible to make, or "mint", your own NFT.</p>.<p>Ultimately, NFTs are digital contracts, with certain rules embedded such as the number of copies available for sale.</p>.<p>Trading NFTs involves technical processes that are sometimes misunderstood -- and that can lead to investors not knowing quite what they are dealing with.</p>.<p>Every interaction with the blockchain involves fees to pay for "mining" -- the hugely energy-intensive computer calculations needed to verify each transaction.</p>.<p>Thousands of users might rush to buy a much-coveted NFT as it's minted, and they have to pay the fees even if they walk away empty-handed.</p>.<p>Some buyers use bots to try to ensure that they get their hands on a token, which makes the market even less accessible for newbie investors.</p>.<p>"A very small group of highly sophisticated investors rake in most of the profits from NFT collecting," blockchain data company Chainalysis said in a recent report.</p>.<p>And it added that NFTs are often sold at a lower price to enthusiasts who have helped to create hype for the project.</p>.<p>"The data suggests that NFTs are far from a surefire investment," Chainalysis concluded.</p>.<p><strong>Check out the latest videos from <i data-stringify-type="italic">DH</i>:</strong></p>
<p>NFTs have sometimes sold online for astronomical sums, with major companies now joining the craze as the tokens find their way into everything from the art market to video games.</p>.<p>But what exactly are these digital assets, and how are they traded?</p>.<p>NFT stands for Non-Fungible Token.</p>.<p>Something that is "fungible" can be exchanged with an equivalent item -- for example, a $5 bill with another $5 bill.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/technology/melania-trump-is-releasing-an-nft-that-will-cost-1-sol-each-1061734.html" target="_blank">Melania Trump is releasing an NFT that will cost 1 SOL each</a></strong></p>.<p>Cryptocurrencies, which use a digital public record of transactions called a blockchain, are fungible.</p>.<p>NFTs are digital items that can be bought and sold using this blockchain technology. But they are not fungible, making them a different type of asset.</p>.<p>Some have sold for millions, including an NFT by digital artist Beeple which went under the hammer at Christie's in March for an eye-watering $69.3 million.</p>.<p>Some of the most coveted NFTs are released via collections of thousands of unique individual cartoons, such as the Bored Ape Yacht Club.</p>.<p>They are seen as intrinsically cool by their owners, who enjoy boasting of their purchases by displaying them as their social media avatars.</p>.<p>The tokens aren't necessarily images, though: on several websites, such as Decentraland and The Sandbox, you can buy virtual land in NFT form.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/adidas-joins-rush-into-metaverse-with-nft-collection-1061615.html" target="_blank">Adidas joins rush into metaverse with NFT collection</a></strong></p>.<p>Critics say investors are spending money on meaningless items, but supporters insist that NFTs are much more than digital trinkets.</p>.<p>Some predict that using the blockchain to record the ownership history of an item will eventually become much more widespread, revolutionising how we think about property.</p>.<p>Like cryptocurrencies, NFTs are bought and sold on specialised platforms. OpenSea is the best-known NFT marketplace.</p>.<p>A sale does not necessarily involve the transfer of the object depicted by the token.</p>.<p>NFTs of famous paintings have been sold, for example, but the buyer does not receive the painting.</p>.<p>What changes hands is a certificate of ownership of the NFT, registered on the blockchain. The certificate must be kept safe in a digital wallet, which can take various forms.</p>.<p>The wallet might be accessed via Metamask, a free internet browser extension, or a secure physical device. It might also take the simple form of a code printed on a piece of paper.</p>.<p>To purchase an NFT, the wallet must contain enough of the relevant cryptocurrency -- for example, ether (ETH) if the person is buying a token on the Ethereum blockchain.</p>.<p>With a little technical know-how, it is also possible to make, or "mint", your own NFT.</p>.<p>Ultimately, NFTs are digital contracts, with certain rules embedded such as the number of copies available for sale.</p>.<p>Trading NFTs involves technical processes that are sometimes misunderstood -- and that can lead to investors not knowing quite what they are dealing with.</p>.<p>Every interaction with the blockchain involves fees to pay for "mining" -- the hugely energy-intensive computer calculations needed to verify each transaction.</p>.<p>Thousands of users might rush to buy a much-coveted NFT as it's minted, and they have to pay the fees even if they walk away empty-handed.</p>.<p>Some buyers use bots to try to ensure that they get their hands on a token, which makes the market even less accessible for newbie investors.</p>.<p>"A very small group of highly sophisticated investors rake in most of the profits from NFT collecting," blockchain data company Chainalysis said in a recent report.</p>.<p>And it added that NFTs are often sold at a lower price to enthusiasts who have helped to create hype for the project.</p>.<p>"The data suggests that NFTs are far from a surefire investment," Chainalysis concluded.</p>.<p><strong>Check out the latest videos from <i data-stringify-type="italic">DH</i>:</strong></p>