You may have heard of bitcoin, but now there's a new digital asset available on the cryptocurrency market causing a stir with investors, called Non-Fungible Tokens (NFTs).
So what are Non-Fungible Tokens and why are they making an impact in the cryptocurrency world?
Non-fungible basically means an item that's unique and can't be replaced with something else.
So while a bitcoin can be traded for another bitcoin (which means it's fungible), a collector's coin would be non-fungible.
Its rarity and uniqueness means it stands alone and people are generally prepared to pay more than its intrinsic value.
Non-Fungible Tokens are a digital representation of this - an online collector's coin if you will.
These non-fungible tokens are attached to assets to verify the authenticity of everything from artworks to sports highlights.
They act as virtual ownership deeds of those digital assets like a digital passport that comes with the asset proving its authenticity.
For example, the most common use for Non-Fungible Tokens is to attach them to digital art.
Digital artist Beeple recently sold a piece for $US70m.
The owner of the Non-Fungible Token associated with the art can now prove that they are the sole owner and there is no other genuine copy.
Rock band Kings of Leon recently announced it would release an album as a Non-Fungible Token, effectively letting someone own the first edition of the digital collection.
There are tokens for digital playing cards and even digital real estate - all bought and sold in online gaming platforms.
One of the most useful features of NFTs is that they are 'programmable', meaning they can interact with software opening up all kinds of possibilities.
For example, you could program trading card NFTs to unlock features in an online game that those without a token miss out on.
Or music artists may choose to sell some premium NFTs that unlock new songs or behind the scenes footage.
Like all crypto assets, investing in NFTs comes with its share of risks.
The NFT space is in the very early stage and is no doubt in a speculative bubble, but their diversity, uniqueness and programmability means their potential uses are almost endless.
- Dr Daniel Marrable is the lead data scientist at Curtin Institute for Computation
