Lots of blockchain news leaves you wondering, “Hmm..what’s going on here?” That’s the impression I got from reading about Nyan Cat being sold as an NFT. And just when I thought I had a handle on what was going on, Twitter’s creator put up an autographed tweet for sale as an NFT. Months later, I am still seeing news about individuals spending house money for rock clip art — and my mom still has no idea what an NFT is.
You may be thinking, what exactly is an NFT?
I think I’ve figured it out after several hours of reading. I’m also ready to cry. But, let’s start with the fundamentals, shall we?
What is an NFT? What does it stand for?
Non-fungible token.
That doesn’t make things any clearer, does it?
Allow me to explain. “Non-fungible” signifies that it is one-of-a-kind and cannot be substituted with anything else. A bitcoin, for example, is fungible — swap one for another and you’ll get precisely the identical item. A one-of-a-kind trade card, on the other hand, is not fungible. You’d get something altogether different if you swapped it for a different card.
This GIF of a dogecoin is an NFT, even though dogecoin in itself it’s not an NFT, get it??
How do NFTs work?
The Ethereum blockchain contains the majority of NFTs.
Ethereum, like bitcoin or dogecoin, is a cryptocurrency, but its blockchain also enables these NFTs, which hold additional information that allows them to function differently from, say, an ETH coin. Other blockchains, can implement their own forms of NFTs.
What should you buy in the NFT supermarket?
NFTs may be anything digital (such as drawings, music, or your brain downloaded and transformed into an AI), but the current buzz is focused on exploiting the technology to sell digital art.
Can people pay for my tweets?
I don’t think anybody can stop you, but that isn’t what I meant. Much of the discussion is around NFTs as an evolution of fine art collecting, but with digital art.
GIF: NyanCat on OpenSea
Do people genuinely believe this will become as popular as art collecting?
I’m sure some people truly hope so, like the person who paid $6.6 million for Beeple’s video.
So you might be thinking: “Just let me right-click on that Beeple video and download the same file the person paid millions of dollars for.”
Yes, you can do that, but here’s where things become a little tricky. You can make as many copies of a digital file as you like, including the art that comes with an NFT.
However, NFTs are intended to provide you with something that cannot be duplicated: ownership of the work. In terms of physical art collecting, anyone may purchase a Monet print. However, the original can only be owned by one individual.
It doesn’t end here. Have you heard of P…Penguin communities?
Right, let me clarify… People have long built communities based on things they own, and the same it’s happening with NFTs. One community that’s been exceedingly popular revolves around a collection of NFTs called Pudgy Penguins. This is not the only community built up around the tokens. One of the earliest NFT projects, CryptoPunks, has a community around it, and there are other animal-themed projects like the Bored Ape Yacht Club. Of course, the communal activities depend on the community itself.
You might ask of course: “What’s the point of NFTs?”
That really depends on whether you’re an artist or a buyer.
- I’m an artist.
That’s fantastic; NFTs might interest you because it allows you to sell work that would otherwise be difficult to sell. If you come up with a truly fantastic digital sticker idea go for it, why not!
However, NFTs include a feature that you can enable and will pay you a percentage every time the NFT is sold or transferred. This makes it possible that if your work becomes really famous and skyrockets in value, you’ll reap part of the benefits.
- I’m a buyer.
One of the most apparent advantages of purchasing art is that it allows you to financially support artists you admire, and this is also true for NFTs. Purchasing an NFT generally includes some basic usage rights, such as the ability to share the image online or set it as your profile photo.
So, in short, NFTs can work like any other speculative asset, where you buy it and hope that the value of it goes up one day, so you can sell it for a profit. Some people treat NFTs like they’re the future of fine art collecting (read: or as you would say differently a playground for the mega-rich).
Can I buy articles as an NFT?
No, but technically anything digital could be sold as an NFT (including articles from Quartz and The New York Times, provided you have anywhere from $1,800 to $560,000).
Where can I find the NFT marketplace?
Image: Cryptokitties.coThere are several marketplaces around NFTs, which allow people to buy and sell. These include OpenSea, Rarible, and Nifty Gateway, but there are plenty of others. NFTs really became technically possible when the Ethereum blockchain added support for them as part of a new standard. One of the first uses was a game called CryptoKitties that allowed users to trade and sell virtual kittens. Thank you, internet.
This person paid over $170,000 for a virtual kittie.
I want to maximize my blockchain use. Can I buy NFTs with cryptocurrencies?
Yes, Probably. Many markets accept Ethereum. However, theoretically, anyone can sell an NFT and ask for whatever type of money they choose. NFTs, like cryptocurrencies, are held in digital wallets (though it is worth noting that the wallet does specifically have to be NFT-compatible).
So that’s all we know about them until now. Still, don’t let this article fool you, NFTs are like unicorns, they exist in a magical land where most of us have no access to, but this hasn’t stopped anyone right. Go out there, sell your first NFT and let us know.
