Non-fungible tokens (NFTs) are all the rage these days. People are literally bidding thousands to own these collectibles,and some are even selling for millions. If your loved ones are into digital art and cryptocurrencies and enticed by the possibility of striking it rich with a speculative investment, then gifting them an NFT could be a great option.
What Are NFTs?
An NFT is essentially a digital file that comes with ownership rights. Anything in digital format can qualify, including pieces of art, sports cards, memes, videos, and audios, and once “tokenized,” they can be bought and sold online.
If you’re new to all this, you might be wondering why people are spending thousands or even millions of dollars on files that they could probably quite easily view and download for free. The answer is exclusive ownership.
When you buy an NFT, you receive a digital token that functions as a certificate of ownership. This title is registered and stored on a shared ledger known as the blockchain, the record-keeping technology behind the Bitcoin network, so that everyone knows that you are the proprietor and have the right to sell the asset. A digital file can be easily and repeatedly duplicated. However, there is only one or a limited number of NFT versions of it.
It is only this year that the market for NFTs has lit up. In February, a 2011 meme of a flying toaster pastry cat sold for more than $500,000. Shortly after, a JPEG of Everydays — The First 5000 Days, a digital artwork created by Mike “Beeple” Winkelmann, fetched $69 million at Christie’s.
How to Gift an NFT
If you don’t already have an NFT collection to gift, then you’ll need to buy one. For non-cryptocurrency enthusiasts, this requires picking up a few key items first. Most NFT marketplaces only accept Ethereum, a digital coin, so you may have to purchase some of that virtual currency before bidding. You’ll also need a digital wallet to store NFTs and the cryptocurrency used to acquire them.
There are several NFT marketplaces online, and each functions slightly differently, including in terms of what assets they trade. Some sell a bit of everything, while others specialize in certain niches, such as sports and gaming.
Once you’ve found a suitable marketplace and obtained all the right tools to trade, it’s time to set up an account and start buying. NFT marketplaces operate similarly to eBay. Usually, there are auctions where the highest bidder wins, although some offer “buy now” options where NFTs are sold for a fixed price.
After you’ve made your purchase, the next step is to transfer the NFT to the person to whom you want to gift it. Many NFT marketplaces now offer this option, and it can usually be achieved with a few clicks of a button. Generally, you’ll need to select the item you want to gift, choose the option to transfer it, then key in the recipient’s wallet address.