What is an NFT?

What is an NFT? Non-Fungible Tokens (NFTs)

A non-fungible token – most commonly referred to as an “NFT” – is a unique digital item stored on the blockchain. An NFT can represent a variety of digital objects like 2D or 3D art, photos, music, videos, or in-game items, to name a few. Once a digital object is used to create (or mint) an NFT, blockchain technology is used to verify the proof of ownership. The NFT is unique and unique to its owner. NFTs can then be traded online, most commonly in exchange for a cryptocurrency.

Although they’ve been around since 2014, NFTs are gaining notoriety now as an increasingly popular way to buy and sell digital artwork. In the first half of 2021 trades of NFTs surpassed an astonishing $2.5 billion.

Why are they so valuable?

From the outside, NFTs can either be unique or part of a series. On the inside, however, each one of them has a unique identifying code and a unique address by which it is owned. So, there is one owner per piece. In contrast to most digital creations, NFTs create digital scarcity.

We are used to digital assets being infinite in supply, easily copiable with ownership being difficult to prove. For instance, if someone posts a beautiful photograph on social media and I download it and show it to my friends, family and fans, how will they know the actual owner and creator of that picture? It will merely be based on hearsay. I could falsely assert ownership over it, for example.

In essence, NFTs solve this ownership problem and make digital assets such as pictures unique and rare. That rarity and uniqueness are the sources of NFTs’ value. Think of each NFT as an unreplicable real painting.

If you understand how the art world works, you’ll understand why some NFTs are worth millions of dollars. If not, keep reading and I’ll give you an example.

Anna & Bob against the world

Imagine Anna, an aspiring artist, is selling her paintings for $10 a piece. Along comes Bob, a famous art curator. For whatever reason, Bob sees value in Anna’s paintings and buys a couple of them. Whatever Bob owns, is regarded as valuable by the community and people usually buy what he sells. One day he decides to sell Anna’s paintings for $1000. As soon as the first sale for the $1000 is made the game is on. People will want to own Anna’s work because it is proven to sell and instead of going through Bob, people will directly go to the source, i.e. Anna. Obviously, she will see the spike in interest and raise the price of her art. All of Anna’s art can now be valued at $1000. And the price will grow with every next sale. Voila! Boom! Anna, make more art! Eureka!

Let me say it in one sentence: whatever the price an NFT is sold for sets the benchmark for all others.

Types of NFTs

There are endless varieties of NFTs: meaningless Jpegs; an artist’s 2D or 3D visual work; iconic highlights from NBA games; political protest videos; memes, Deadpool 2 posters; a financial recourse for musicians during the pandemic; in-game assets for online games; tickets for real-life events; trading cards;  collectables… The list goes on!

If there is one NFT artwork that you should know about it’s Beeple’s “EVERYDAYS: THE FIRST 5000 DAYS”. It is the most expensive NFT sold to date and was passed over to one very appreciative buyer for a staggering $69,346,250. It is also the first NFT to be sold at a major auction house called Christie’s in the UK. This piece took over 13 years to create, you guessed it right, 5000 days exactly. Beeple uploaded a new digital work of art every day to his website for 5000 days straight and put it all together in a single piece, which has put him on the list of the top 10 most expensive artworks by living artists. Good luck replicating that…

Another example, a piece of a virtual real estate, coined as the “first digital house” sold for $500,000. Created by Kim Krista, it is a video of a glasshouse somewhere in the Martian mountains. Her message was that digital assets can liberate us.

NFTs, like paintings, have stories to tell.

But why???

Anyone can view and copy the images or even the entire collage of images online for free. Right-click -> “Download image” or don’t even bother with that, just take a screenshot and paste it somewhere. Still, millions are being spent on NFTs daily. But why?

Well, it’s complicated. Let’s just say that collectors have another thing to brag about when they own an expensive piece. And creators finally have more than just  “Like”, “Share” or “Comment” buttons; now they have a “Buy and own” button and investors have a new asset to trade. As long as the wheel of supply and demand turns, NFTs will be a commodity to consider. Oh, and they don’t gather dust.

Parting words

To ask “what is an NFT” is to ask “what is paper” 2200 years ago. We are at the infancy of this technology and the plethora of uses for it is yet to be discovered. As the virtual world of the internet shifts more and more towards a decentralized, trustless, verifiable web3 and blockchain adoption grows, so will NFTs.

Can you imagine a world where a person’s ID is an NFT, where legal documents are NFTs, where newsreels are NFTs, where student grants are NFTs, where project fundraisers are NFTs, where real-estate is traded with NFTs, where each image, song, video posted online is an NFT? The possibilities opened up by this exciting technology are potentially endless and are still being grappled with.

How to become a creator?

Now that you understand an NFT’s value and are equipped with the knowledge to defend NFTs in any conversation, you might be wondering how hard it is to get started. It is easy.  A new sustainable NFT marketplace focused entirely around the artist and with the lowest fees is being built here. Make sure to check back soon as it is said to launch any time in the near future… In the meantime, you can hang out in this Telegram channel and learn more about NFTs or talk about your view on the subject.
Another way to market your NFT as a new upcoming artist is to try get it listed on sites like NFT Drops and NFT Sales.

Goodluck.