What is NFT?Here is what you need to know about non-fungible tokens

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Where do people buy NFT?

Digital artwork can be purchased on online marketplaces such as Opensea.io, Niftygateway.com and Superrare.com.

Well-known traditional auction houses have also entered this field: at the recent Christie’s auction, the price of a digital artwork was US$69 million. At the same time, Sotheby’s announced this month that it will launch its own NFT market.

Sebastian Fahey, managing director of the auction house, said: “We are in a unique position at Sotheby’s to apply our expertise and curation to the emerging art world of the digital native.”

How big is the NFT market?

How is NFT priced?

“In the end, this is something you can escape,” Schacht said.

He added that, having said that, the reputation of artists, including their gallery exposure and following scale, are all important factors.

How do they collect taxes?

Shehan Chandrasekera, CPA and head of tax strategy at crypto tax software company Cointracker.io, explained that NFTs are usually taxed at the IRS collectibles tax rate.

This means that value-added digital artworks held for less than one year will be taxed as high as 37%, while those held for longer periods will be taxed at a maximum tax rate of 28%.

Chandrasekera said that one important thing to note is that if someone uses cryptocurrency to buy NFT, they will also pay capital gains tax on the profits of the digital coin.

“A lot of people don’t realize this,” he said. “They thought,’I just used my cryptocurrency. I didn’t cash it out.’ People have to be very careful about it.”

Why do people often use cryptocurrency to buy NFT?

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Schachter said that there is a huge overlap between those interested in digital currencies and those interested in NFTs. “These are digital natives living on the Internet.”

Until now, many people who have seen their cryptocurrency soar in value have had little way to use them. For example, buying a house or car with Bitcoin or Ethereum is not easy.

“There is such a crazy demand, and now suddenly there is something to buy,” Schacht said.

What are the criticisms?

Schachter believes that most of the criticism of NFT comes from the traditional art world because it fears destruction.

“The first order of attack is to equate it with currency,” Schacht said. “‘It’s just money.’ Well, what could be more important money than artworks stored in a free port that you have never seen before?”

Other opponents believe that art should be observed in the museum and in person, not on the screen. “But there is already dedicated hardware to check the NFT on your desk,” Schachter said. “This is an independent device that can play your NFT in a loop.”

The elf has come out of the bottle, it will only grow.

Kenny Schachter

Art dealer

Nevertheless, skeptics abound.

Entrepreneur Anil Dash, who wrote the NFT, said that the leaders in this field are people who use their passion for art to hide their desire to make money.

Dash said: “A lot of these people are buying meme stock.” “They don’t think GameStop will suddenly become very good at selling video games, just as they think this terrible picture of ape is really valuable.”

What are the risks?

Schachter said buyers must be very careful when storing their digital artwork online, but this is no different from how people should treat their online bank accounts.

He said fakes are another problem: “As long as there is money, there will be crimes.”

However, the main danger is that you lose all your money, because digital artwork loses its value.

Is it really art?

Some major cities including London and Cologne already have NFT exhibitions.

At the same time, a museum dedicated to NFT will soon come to Midtown Manhattan.

“The elf has come out of the bottle, it will only grow,” Schacht said.

He said that the technology will not replace old art forms such as sculpture and painting, but will coexist with them.

“There will be a 3D holographic projection of the sculpture, you just have to press a switch and it will sit in your room,” he said.

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