Nyan Cat
Credit: © Chris Torres

How much would you pay for an image of an animated cat with a Pop-Tartlike body soaring through a starry sky, trailing a rainbow in its wake?

If you said about $600,000, then you might be the proud owner of a non-fungible token, or NFT, of this feline-pastry-color explosion (also known as Nyan Cat).

An NFT is a unique digital file of such things as a piece of digital art, video clip, or digital coupon. A person can buy an NFT, becoming the sole owner of that digital file. Think of it as a digital certificate of authenticity.

The key word is digital. This means that the person who purchased the NFT of Nyan Cat can’t display the framed picture in a museum or even touch the picture to see if the Pop-Tartlike body is as flaky as the original treat. Rather, an NFT represents ownership of something you cannot hold in your hand.

NFT’s have been attracting a lot of attention because they have been fetching extremely high prices. A video clip of the basketball superstar LeBron James blocking a shot sold for $100,000 in January. Two months later, the artist known as Beeple sold his digital collage Everydays: the First 5000 Days for $69 million.

Everydays: the First 5000 Days is a JPEG created by Mike Winkelmann, known professionally as Beeple. The work is a collage of 5000 images created by Winkelmann for his “Everydays” series. A non-fungible token representing Everydays: the First 5000 Days was sold for $69.3 million at Christie’s in 2021, the highest price paid for an NFT and the third-most expensive work by a living artist.
Credit: Everydays: the First 5000 Days (2021), JPEG created by Beeple (Mike Winkelmann); Christie’s

Just as you can’t pick up and hold an NFT in your hand, you can’t pick up an NFT at your local supermarket. There are several online NFT marketplaces, including OpenSea, Rarible, and Mintable. There is a marketplace for basketball moments called NBA Top Shot. And, if you’re in the market for a social media post, Valuables sells tweets.

So, what’s so valuable about an NFT?  The owner of Beeple’s work can’t feature the image in a dining room or use the 5,000-image collage to wallpaper a house—perhaps winning the award for most expensive wallpaper of all time. People buy NFT’s, particularly NFT art, in the hopes that the value will soar. The owner of Everydays: the First 5000 Days might think that the collage could re-sell for $100 million or more. In that way, purchasing an NFT could be a good investment opportunity.

Other people buy NFT’s for publicity or to join the ever-growing community of NFT enthusiasts. Some people might just want bragging rights. And bragging rights—whether digital or tangible, Pop-Tartlike or Toaster-Strudelike—are always valuable.