Castle Rock Financial PlanningCastle Rock Logo

A trusted fee-only planning firm.

lauri@castlerockfp.com
651-294-0013
  • Home
  • About
    • Lauri Salverda, CFA, CFP®, AIF®
    • Jody Stroh
  • Services
    • Financial Planning
    • Investment Management Services
    • Retirement Planning
    • Estate Planning
  • Why Choose Us
  • Resources
  • Client Portals
    • Stashboard
  • Blog
  • Contact

What is all the talk about NFTs?

April 5, 2021 By Lauri Salverda, CFA, CFP®, AIF®

Digital currency like Bitcoin has been around since 2009 and has widened our understanding of what currency looks like. Now there’s a new currency making waves: NFTs.

What is an NFT?

We’re all at least somewhat familiar with Bitcoin by now: it’s a digital currency, with balances kept on a public ledger and created through a mathematical encryption algorithm. The “encryption” part is what makes a digital currency also meet the definition of a cryptocurrency. Bitcoin uses huge amounts of computing power to verify transactions using complex mathematical equations. (In fact, the amount of computing power so massive, the annual carbon emissions from the electricity required to mine Bitcoin and process its transactions are equal to the amount emitted by all of New Zealand.)

But now, more than a decade after the launch of Bitcoin and the launch of many similar cryptocurrencies, the financial sector is seeing something new and exciting: the nonfungible token (NFT).

So, how does an NFT compare to Bitcoin?

  • Both are verified using blockchain technology, a unique network of computer recorded transactions that provides buyers proof of authentication and ownership.
  • Cryptocurrencies like Bitcoin are considered fungible tokens because they are identical to each other and therefore can be used as a form of currency—they are essentially “electronic cash.”
  • An NTF can take many forms including videos, .jpg, songs, or any digital asset. NTFs shift the crypto paradigm by making each token unique and irreplaceable.

Why are NFTs so popular?

Most importantly, NFTs provide artists who use digital mediums, who had been previously left out of the art sales market, a way to receive payment for their creations. For example, the artist Mike Winkelmann, also known as Beeple, just sold his NFT creation “Everydays – The First 5000 Days” at Christie’s for $69.3 million, the third highest price achieved by a living artist.

Other popular NTFs include Dapper Labs, who partnered with the NBA and in 2020 released their beta version of their TopShot collectable and tradable NFT app. In October of 2020, Dapper Labs released its full version to its fans and by February 28. 2021 reported over $230 million in gross sales.

One of the exciting elements of NTFs is that they appear to be forming new markets and forms of investment. In the future you may be able to break up parcels of land easily by taking pictures of the various areas within that parcel and sell each area as an NFT, rather than selling the entire parcel.

Are NFTs a good investment?

It is still a budding market having just started in 2017.  With the activity around the world and digital art auctions at Christie’s, it is clear that NTFs have taken the art market by storm.  It has started strong, but remains to be seen over the long haul, if value is retained.  As in all markets, there are always risks of booms and busts, but because of the newness of this market, no one can say for sure where we are now.

Filed Under: Blog Posts

About Lauri Salverda, CFA, CFP®, AIF®

Lauri Salverda has been working with individuals and families to help them reach their financial goals since 2001. Warm and personable, she works closely with her clients to make sure they have the information they need to be confident in the decisions they are making about their future.
Read Lauri's Biography >

Recent Posts

  • What Are I Bonds And How Do They Work July 14, 2022
  • When You or Someone You Love Receives the Diagnosis June 21, 2022
  • Are ETFs Truly the Best Way to Invest? September 24, 2021
  • Castle Rock named one of Top Financial Advisors in St. Paul by Expertise for Third Year Running August 1, 2021
  • Making Summer Jobs More Lucrative for Your Children and Young Adults July 4, 2021
  • What is all the talk about NFTs? April 5, 2021
  • How do you value a bond? January 7, 2021
  • ESG Investing: the What and the Why October 1, 2020
  • Women financial planners group rings in 25th anniversary with $25,000 donation to promote women, diversity in the industry August 6, 2020
  • Planning Your Estate June 22, 2020

Blog Categories

  • Blog Posts
  • Financial Planning
  • Industry News
  • Investment Management
  • Lauri Salverda, CFA, CFP®, AIF®
  • Philanthropy

Contact Information

Castle Rock Financial Planning
2267 Waters Drive
Mendota Heights, MN 55120
lauri@castlerockfp.com
651-294-0013

Recent Blog Posts

  • What Are I Bonds And How Do They Work July 14, 2022
  • When You or Someone You Love Receives the Diagnosis June 21, 2022
  • Are ETFs Truly the Best Way to Invest? September 24, 2021

Can’t find what you’re looking for?



Copyright © 2023 Castle Rock · Financial Services Marketing by PSM Marketing · Log in