What is an NFT? Explaining Crypto Buzzwords Like You’re Five

NFTs, Bitcoin, crypto—you’ve probably heard these words thrown around in conversations, online debates, or maybe even that one exhausting friend who won’t stop talking about his “investment portfolio” over brunch. 

But what do they actually mean? And more importantly, do you have to care?

If it all feels foreign and you’re stuck assembling a conversation around blockchains, tokens, and digital wallets like a complicated piece of Ikea furniture, consider this guide your allen key for deciphering at least enough to put it all together. 

What is an NFT? 

First off, NFT stands for Non-Fungible Token. Think of it as a one-of-a-kind digital item that you can buy, sell, and own. An NFT is something akin to a digital trading card. It’s a unique digital file, like an image, video, or even a social media post.  

Why Would Someone Buy an NFT?  

Bragging Rights – It might seem trivial but it’s true! Owning an NFT is partially (or largely) about the exclusivity. Especially in instances when only one is available, it’s like being able to say “Check out this thing I own that nobody else can claim.” It’s digital art collecting but without the need for physical wall space.  

Investment – Many times, people choose to invest in NFTs with the hope that they’ll become more valuable over time. It’s not unheard of…Sometimes they do increase in value and sometimes they do not. It might be worth the gamble for someone who finds them of interest. 

Virtual Lifestyle – It’s part of the “Metaverse” homebuilding. Some people have a desire to own virtual things for their virtual lives in their virtual worlds. It’s like customizing your video game character, but way more expensive.  

Bitcoin: Digital Money for your Computer’s Coin Purse  

Bitcoin is a form of cryptocurrency—and cryptocurrency is just another way of saying “internet money.” Unlike dollars or cents (and much to the consternation of many traditional investors), Bitcoin isn’t controlled by a centralized banking system. Instead, it exists solely online, is decentralized, and actually fluctuates faster than you might expect. (Think: your motivation to shovel snow in the winter).  

What’s the Appeal of Bitcoin?

• It exists outside of government control, which is good for privacy but not so good for stability
• It’s a limited product, meaning the rarity contributes to the value
• It’s a fun tech product (and don’t underestimate the appeal of fun)

On the other hand…Storing bitcoin in a digital wallet means that you need to be ever-aware of your password or else lose access permanently. 

Are NFTs and Crypto our Inescapable Future?

It’s hard to predict and people seem split on the verdict. Some people call cryptocurrency a revolution of finance and NFTs a new path for the art world. Others, while showing interest, cannot be convinced to take them seriously beyond their purpose as a conversation starter. 

The best advice is to be conscientious and never invest more than what you’re willing to lose. WIll it pay off? You could flip a bitcoin for as dependable a prediction as anything else.