People are paying millions for clips that can be viewed for free. Welcome to the world of ‘NFTs’

People are paying millions for clips that can be viewed for free. Welcome to the world of ‘NFTs’

From art to sports trading cards, people are spending millions of dollars on digital collector's items.These crypto collectibles, known as NFTs, have exploded in popularity lately. A video clip created by digital artist Beeple, whose real name is Mike Winkelmann, was flipped for a record $6.6 million last week. It had originally been bought for around $67,000.Meanwhile, one of thousands of computer-generated avatars called CryptoPunks recently sold for $2 million. And a crypto art rendition of the Nyan Cat meme from 2011 sold for about $590,000 in an online auction.At the same time, critics see the NFT craze as another potential speculative frenzy in crypto that's sure to fizzle out eventually. So what are NFTs? And why are they suddenly being sold for millions? CNBC runs through what you need to know.

What are NFTs?

But unlike most virtual currencies, you couldn't exchange one NFT for another in the same way that you would with dollars or gold bars. Each NFT is unique and acts as a collector's item that can't be duplicated, making them rare by design.You can think of them like the crypto alternative to rare Pokémon or baseball cards.The rise of the internet meant that anyone could view images,