What Are Non-Fungible Tokens (NFTs)?

SAN JUAN, Puerto Rico — NFTs, non-fungible tokens, are a type of cryptocurrency that is booming among celebrities and crypto investors, but what are they?

NFTs are essentially digital ownership certificates, according to Director Shirley McPhaul of Crypto Curious, Puerto Rico Block Trade Association. The ownership could be for a jpg, an mp3, an mp4 or even a house or car. 

San Juan is home to one of the few NFT Smart Galleries in the United States. The Light House Gallery, founded by The Mighty Ducks Actor Brock Pierce’s wife, Crystal Pierce, showcases NFT artwork. 

“To get a little more technical, an NFT is a smart contract,” said McPhaul. “A smart contract that is associated with a digital file that signals that your wallet address owns that digital file.”

NFTs are like a receipt according to Keiko Yoshino, Executive Director of Puerto Rico Block Trade Association.  NFTs authenticate that a file is yours.  When you purchase an NFT, all of the information is available on a blockchain.

A blockchain is a centralized ledger, according to McPhaul. Essentially, this is a database that cannot be hacked or changed, only added to. It only goes forward and all of the past information stays the same. 

“With a blockchain, every time that you put on a new block it is agreed that all of the information is correct,” said Yoshino. “There’s trust in the truth without knowing anybody.” 

This completely removes the human aspect of the supply chain, as smart contracts are happening automatically online. NFTs track accurate data, so digital art collectors and creators have begun using this platform to track the buying and selling of art. 

To start creating your own NFTs, you can go on OpenSea or Crypto.com to make an account, verify who you are and legitimize yourself. Next, you have to get a cryptocurrency digital wallet. With that wallet, you have to purchase cryptocurrency, such as ether, polygon, dogecoin, etc. This is what you will use to buy, sell and register NFTs. 

Celebrities like Justin Bieber, Paris Hilton, Katy Perry and Snoop Dogg have gotten their fair share of NFT collecting and distributing as of late. In February, Justin Bieber purchased his second NFT from Bored Ape Yacht Club for $444K.

Snoop Dogg collaborated with The Sandbox Alpha to release NFT avatars that are playable in the metaverse game in September of 2021. There has been backlash on social media around this and other celebrities joining the NFT metaverse, as collectors and as creators. 

“There’s a lot of scams,” said McPhaul. “A lot of celebrities do NFT projects without knowing what they’re doing. There have been some celebrities that have told their audience to buy into their crypto projects and then it ends up being a ‘rock pool.’” 

A rock pool is when there is a Kickstarter for a crypto project and then there is no follow-through and people run away with your money. McPaul has been “rock pooled” a few times. 

“Celebrities will be like, ‘You should do this project on Kickstarter,’” said Yoshino. “Then people donated because they think that it is going to work and trust the celebrity.”

YouTubers like Jake and Logan Paul have done this in the past, according to McPhaul. 

“When you start getting celebrities and endorsements into it, it makes the NFTs go into a whole nother level,” said Green Bay NFT Artist Sabrina Jordan. “Now everyone is going to want to buy these and not just anyone’s. If Snoop Dogg is saying to go buy this, who’s not going to buy that?”