A non-fungible token (NFT) of a video clip of LeBron James dunking recently sold for more than $200,000 on NBA Top Shot, a website that allows users to buy and sell NBA video clips. An NFT is a digital certificate, kind of like a digital barcode, which certifies that a person owns that specific video clip on NBA Top Shot. But the clip can still be watched for free by anyone on NBA Top Shot itself. And the same play can be seen — also for free — on YouTube. So why are the hundreds of thousands of collectors on NBA Top Shot willing to spend money on these NFTs?
On The Indicator, we explain the sudden and extraordinary popularity of the market for a new kind of digital good: NFTs. We explore what they are, the psychology behind owning them and the risks of trading them.
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