I'm guessing if you're in the "crypto" sphere in the last few days you haven't stopped hearing about NFT...... There's nothing like an explosion of blockchain news to leave you thinking, "Um ... what's going on here?" That's the feeling I've experienced when reading articles like Grimes getting $6 million for various NFTs or this one about Nyan Cat sold as some sort of art piece . And just when we all thought we knew what the topic was about, along comes the founder of Twitter putting an autographed tweet up for sale as NFT.
After several hours of reading about it, I think I know. That's why, even though I think my head is going to explode, I'm going to try to explain it to you, to see if by telling it we both assimilate the concepts and everything becomes a little clearer. .....
Well, let's start with the basics:
So, given the above, you might be wondering: what is an NFT, anyway?
WHAT IS AN NFT? WHAT DOES NFT STAND FOR?
NTF stands for "Non Fungible Token".
That's right, if you're not very knowledgeable, that doesn't make it much clearer.
Digging deeper we should say that NFT tokens, or non fungible tokens, are a solution created to allow us to represent objects with unique, unrepeatable and indivisible qualities within a blockchain.
Okay, sorry. "Non-fungible" more or less means that it is unique and cannot be replaced with something else. For example, a bitcoin is fungible: exchange one for another bitcoin and you get exactly the same thing. However, an NFT is a one-of-a-kind thing, it is not fungible. If you were to exchange it for a different NFT, you would have something completely different.
HOW DO NFT WORK?
At a very high level, we can say that as of today most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store additional information that makes them work differently than, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFT. (Solana, Polygon, Theta for example ). The main requirement is that they can host the ability to run Smart Contrats.
WHAT IS THE VALUE OF AN NFT?
NFT's really can be anything digital (like drawings, music, your brain downloaded and turned into an AI), but much of the current excitement about creating or acquiring NFT's revolves around using the technology to create/sell/own a new form of digital art.
DO PEOPLE REALLY THINK THIS WILL BECOME AN ART COLLECTION?
I'm sure some people really hope so, like who paid almost $390,000 for a 50 second video of Grimes or the person who paid $6.6 million for a Beeple video .....
Sorry, I was busy right clicking on that Beeple video and downloading the same file the person paid millions of dollars for.
I know this is rude. But yeah, this is where this all gets a little weird and awkward . You can copy a digital file as many times as you want, including the artwork that is included with an NFT...., so does it really make sense?
Yes, it does. NFTs are designed to give you something that can't be copied: ownership of the work (although the artist can still retain copyright and reproduction rights, just as with physical artwork). To put it in terms of physical art collection: anyone can buy a Monet print. But only one person can own the original.
SORRY FOR BEEPLE, BUT THE VIDEO IS NOT REALLY A MONET.
What do you think of the $3,600 Gucci Ghost, or that Beeple image that was auctioned at Christie's and ended up selling for $69 million? , which, by the way, is $15 million more than Monet's Nymphéas painting sold for in 2014.
I'm no art expert but from my point of view, whoever got that Monet can appreciate it as a unique physical object. With digital art, a copy is literally as good as the original.
SO IT ALL DEPENDS ON THE POINT OF VIEW FROM WHICH YOU LOOK AT IT?
I think that's really the key, it depends on whether you're an artist, buyer or collector you'll see things one way or another. Let's compare the different points of view:
Artist.
Your interest in NFTs is normal, as they provide you with a way to sell work for which you otherwise would not have had much (or any) market. If you come up with a cool sticker idea, what are you going to do, sell it on the iMessage App Store? No way, I turn it into NFTs and live off of it.
Also, NFTs have a feature you can enable whereby they will pay you,as the author, a percentage every time that NFT is sold or changes hands , ensuring that if your work becomes very popular and increases in value, you will see some of that profit.
Buyer.
One of the obvious benefits of buying art is that it allows you to financially support artists you like, and that's true with NFTs (which are much more trendy than, like, Telegram stickers). Buying an NFT generally also gives you some basic usage rights, such as being able to post the image online or set it as your profile picture. In addition, of course, there are other rights such as the right to brag that you own the art, with a blockchain record to prove it.
Collector.
NFTs can work like any other speculative asset , where you buy it, and wait for its value to go up someday, and then sell it making a profit.
SO EACH NFT IS UNIQUE?
In the boring, technical sense that each NFT is a unique token on the blockchain. But while it could be like a Van Gogh, where there is only one real definitive version, it could also be like a trading card, where there are 50 or hundreds of numbered copies of the same artwork.
If the above is true, who would pay hundreds of thousands of dollars for what basically amounts to a trading card?
Well, that's part of what makes NFTs so complicated. Some people treat them like they are the future of fine art collecting while others treat them like Pokémon cards (where they are accessible to normal people but also a playground for the mega-rich).
Can I buy this text as NFT?
No, but technically anything digital could be sold as NFT. deadmau5 has sold digital animated stickers. William Shatner has sold Shatner-themed collectible cards (one of which was apparently an X-ray of his teeth).
In reality, could you buy someone's teeth as NFT?
Seeing as how the matter is progressing, it will be a matter of tieompo..... There have been some attempts to connect NFT to real-world objects, often as a sort of verification method. Nike has patented a method for verifying the authenticity of sneakers using an NFT system, which it calls CryptoKicks . But so far I haven't found any teeth, no. I'm afraid to keep looking, maybe next time that's what I'll find.
Look? where?
There are several marketplaces that have sprung up around NFTs that allow people to buy and sell. These include OpenSea, Rarible and Grimes' choice, Nifty Gateway, but there are many others.
I heard there were kittens involved. Tell me about the kittens.
NFTs actually became technically possible when the Ethereum blockchain added support for them as part of a new standard . Of course, as you may know one of the first uses was a game called CryptoKitties that allowed users to trade and sell virtual kittens. Thank you, internet.
I love kitties .
But less than the person who paid over $170,000 for one.
After kittens, what's next?
There are already games that allow you to have NFT as items. Even virtual land parcels are sold as NFT. Recently on Axie Infinity one was sold for 888.25 ETH or what amounts to $1.5 million. There could be opportunities for players to buy a unique in-game gun or helmet or whatever as an NFT, which would be a flexibility that most people could really appreciate.
Could you pull off a museum heist to steal NFT?
That depends. Part of the appeal of blockchain is that it stores a record of every time a transaction is made, which makes it harder to steal and flip than, say, a painting hanging in a museum. That said, cryptocurrencies have been stolen before , so it would really depend on how NFTs are stored and how much work a potential victim would be willing to do to get their stuff back.
I WANT TO MAXIMIZE MY USE OF BLOCKCHAIN. CAN I BUY NFT WITH CRYPTOCURRENCIES?
Yes. Probably. Many exchanges accept Ethereum. But technically, anyone can sell an NFT and can order any coin they want.
LASTLY, IS IT WORTH INVESTING MONEY IN BUYING NFT AT THIS POINT OR WILL IT BE JUST ANOTHER FAD?
Regarding the question about whether they are a fad or not, the answer is clearly YES. But I also have to tell you that, in my personal opinion, NFTs are here to stay. It is true that there is currently a special FOMO for the acquisition and creation of NFTs that reminds me a bit of the injection of money that entered the crypto market in 2017 with the boom of ICOs. It is true that they are not comparable phenomena, but that is the feeling they give me.
Regarding the question about whether it is profitable or advisable to make investments in NFT with a speculative nature in order to be able to generate future profits, well, that depends on the economy of each one. Currently there is a growing blockchain industry dedicated to create new services based on or around NFT as well as many others that already existed to which they try to add NFT in any way, in order to attract potential users.
THE NFT GAMES PHENOMENON
As we have mentioned in previous paragraphs, for some time now games or virtual worlds have been created (Axie Infinity, Decentraland, etc) in which the characters, terrains and part of their equipment or utensils are based on NFTs.
If we combine this with the fact that the videogame industry moves many billions of dollars every year, I think it would be easy to think that the result of the combination could be that NFTs could be a very profitable potential investment in the long term.
You have to take into account that a plot of land in one of these games that a few months ago was worth a few dollars today is selling for thousands, even millions of euros as if it were a plot of land in the center of New York. The same happens with the characters of these games, each of which are unique, since they are NFTs. They are sold or rented for increasingly large sums of money. In addition, depending on the game there are dynamics in which these characters (NFTs) can be crossed and mixed to create new characters, which in turn can be crossed again a finite number of times, leading to the creation of an increasingly lucrative market.
AXIE INFINITY
What's more, in some case like Axie Infinity in addition to the breeding of new characters (NFT) that can be subsequently sold to third parties, with the dynamics of the game (battles, etc) utility tokens are generated (Small Love Potion or SLP) which are a cryptocurrency that can also be traded later on exchanges to exchange for Fiat money or other cryptocurrencies. All this generates a market of which it is said that many people can even generate a daily livelihood, just by playing.
And the same goes for land. When you do a little research the buyers of these as well as many of the aforementioned characters are not enthusiastic users. Most of them are companies with large capital that do it as an investment, and then rent them. Whether it is the land they speculate on, as would be the case with a traditional Real State in the real world, or the characters themselves with which they create equipment or schools that they rent for users to use in exchange for a small commission on the utility tokens generated.
As you can see, the world of NFT is only at its beginning, so as everything in this crazy world of blockchain and cryptocurrencies, it is not advisable to lose sight of it and follow it closely, since everything points to the fact that it can be a potential business niche.
