InvestorQ : What are Non-fungible tokens or NFTs?
vaishnavi mhatre made post

What are Non-fungible tokens or NFTs?

vidhya Laxmi answered.
1 year ago
NFTs, or nonfungible tokens, are unique assets that can’t be replaced with something else and are verified and stored using blockchain technology. They can include everything from music to a website domain. The current trends are exploring digital art space for NFTs. The market exceeded $10 billion in transaction volume in the third quarter of 2021, according to DappRadar, a company that tracks data on crypto-based applications.`

The NFTs in the digital art space is priced based on many factors, including the artist's reputation, including their gallery exposure, and their following size. The NFTs are taxed at the IRS’s collectibles rate. That means that the appreciation on a digital artwork held for less than a year will be taxed at up to 37%, and those owned for longer will be levied at a maximum rate of 28%. Generally, NFTs are bought with cryptocurrencies. If so, they’ll also be levied with capital gains taxes on the profits made on their digital coins.

The biggest risk to owning NFTs in the digital space is that your digital artwork could lose value at any time, thus leading to a huge loss to the owner. The other issue with digital artworks is the hassle of storing the same online and digital fakes.