What's A Non-Fungible Token? Why Some Collectors Are Spending Millions On Them

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The latest Internet hype is about a thing that doesn't really exist. Some collectors are spending millions of dollars on digital items called NFTs, and here's the thing - anyone can make one of these. NPR's Bobby Allyn explains.

BOBBY ALLYN, BYLINE: A meme of an animated cat with a Pop-Tart body, a video clip of Kobe Bryant dunking, an image of an oil painting of Batman - all have sold for hundreds of thousands of dollars apiece in recent weeks.

KATIE HAUN: Remember those days where people would line up for the newest, you know, Nike Air Jordan sneakers at the physical store? This is the new digital equivalent.

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ALLYN: Katie Haun is a general partner at the venture capital firm Andreessen Horowitz. They are plunging big bucks into NFTs. That's short for a nonfungible token. In plain English, that means a collector's item that lives on the Internet.

HAUN: It's everything that brings together culture, and it's also a bet on the future of e-commerce.

ALLYN: The artist Grimes recently made nearly $6 million selling NFTs like a piece of art featuring a baby floating in space. The NBA has seen more than $200 million in NFT sales from clips of game moments. OK, OK, but what exactly are people buying? I asked NFT expert Donna Redel.

DONNA REDEL: So what you get is a very interesting question.

ALLYN: So anything on the Internet can be downloaded and copied and shared infinitely, right? An NFT is trying to bring order to that chaos. It's a unique barcode, a certificate of authenticity that says, this thing on the Internet is mine, and nobody else can have it. Here's how NFT enthusiast Jake Bruckman puts it.

JAKE BRUCKMAN: These are the property rights to digital content.

ALLYN: Bruckman runs an NFT art gallery. He says the new craze is tapping into a couple things. First, people have always like to collect - comic books, Beanie Babies, baseball cards - and now it's NFTs. Then he says the NFT movement has something in common with the WallStreetBets group on Reddit who sent the price of GameStop soaring.

BRUCKMAN: This is all, like, part of the same process that we're seeing. People, especially young people, they're finding it more natural, more easier than ever to coordinate on the Internet in the form of digital communities.

ALLYN: He says in these communities of people hanging out together online, an NFT gives you clout. Its cachet, whether it's a pixelated alien face there are only nine of or a photo of Lindsay Lohan. Now, this is the Internet, so not shocking that some are taking NFTs to absurd places. Some have turned tweets into NFTs. Bruckman has seen it all.

BRUCKMAN: I saw a project the other day which was selling colors (laughter) - off-white and (laughter) like, dark orange.

ALLYN: You still might be asking yourself, what? Why? So I thought I'd give it a shot. I went online to an NFT marketplace where you bid on items, in cryptocurrency, of course. I stumbled on something that caught my eye, a stop-motion animation of a box of French fries where the fries move like a jellyfish. OK, I'll say it's worth three bucks. Prices on these things can be pretty volatile. I tracked down the artist, a guy named Javier Perez Estrella in Ecuador. I was asking him some questions about the art, but then he said, wait, wait, which NFT are you talking about now?

JAVIER PEREZ ESTRELLA: Yeah - because I have a lot of animations with French fries, and I want to be sure.

ALLYN: He confirmed, yes, we are talking about the same French fry animation. Last I checked, someone outbid me with a $77 bet. Bobby Allyn, NPR News, San Francisco.

(SOUNDBITE OF PENSEES' "FACELESS ARTIST") Transcript provided by NPR, Copyright NPR.