WTF is NFT?
An overview of the Exploding Non-Fungible Token market and Where it is Headed
If you are in the blockchain space, then you have likely been bombarded with a new acronym: NFT. And if you’re an artist, then you likely are finding yourself swimming in a sea of new lingo as you step into the NFT space, made possible by blockchain protocols. So, WTF is an NFT? Let’s break it down….
NFT is a shorthand for “Non fungible token.” Fungibility is what enables currencies to be transacted with ease. I can give you $3 and you accept it in exchange for a cup of coffee. This example shows how dollars are fungible. Fungibility is a central characteristic of a currency. And, many things have value that are not currencies.
Unlike currencies, Non-fungible tokens contain unique data that make each NFT non-interchangeable with another NFT. For example, let's look at a house. No two houses are the same: they have different layouts, sizes, exteriors, updates, etc. Even if two homes are identical in build, they sit on different ground. In the same way, no two NFTs are the same, even ones that are in a series because each one is individually and uniquely identified. The non-fungible nature of these unique tokens means they can be used in ways the currencies we’ve come to love cannot be used.
History of Non-Fungible Tokens
Non-fungible tokens first made their way into the mainstream when CryptoKitties went viral in December of 2017. A few years of experimentation later, and we’re seeing a myriad of unique applications of NFTs. As of this writing, non-fungible tokens are creating verifiable digital scarcity for creative assets such as: digital music, artwork, gaming skins, event tickets, collector cards (e.g. sports, Magic The Gathering) and much more. NFTs are being applied to a growing list of sectors and spaces that use unique digital items. What makes NFTs a game changer is that they inherently prove authenticity and ownership over digital items. We expect that in the not too distant future, physical items will also be able to be verified through NFTs.
Digital Art, Music, Tickets, and More
NFTs enable artists, content creators, collectors and many others to create unique content on the blockchain that is immediately available to sell globally via a growing suite of decentralized marketplaces (we will discuss this later in this article). This evolution of the blockchain ecosystem is providing a way for people to collect, earn, and make a living off crypto that is independent of trading.
Right now, most NFTs are built on Ethereum’s ERC-721 protocol Other blockchains and protocols contain non-fungible properties. However, the Ethereum blockchain has been the most popular blockchain for NFTs. This means that purchasing NFTs with cryptocurrencies like Bitcoin, Ethereum, and other digital asset tokens is a fast and simple process.
Since 2020, the total value of NFT transactions quadrupled to $250 million, while the number of wallets trading them nearly doubled to over 222,179. <SOURCE>
WTF Is Digital Content Even Worth?
NFTs can be worth a lot. Artists, musicians, sports players, and twitter founders are acting as the vanguard as we discover how much NFTs are worth. But what is the value of holding these bits of digital detritus? Much like currencies, there are a host of properties the NFTs contain that make them valuable - to the buyers and sellers alike. Like all things blockchain, NFTs are helping producers connect with consumers more efficiently to benefit the entire marketplace. By cutting out lecherous middlemen (e.g. appraisers, resellers, brokers), creators can reap more of the rewards for their work, consumers can have a more authentic relationship with creators and erase the nefarious aspects of the art/collectable marketplaces. Below are some additional factors that make NFT’s valuable...
NFTs are Unique and Immutable
Many NFTs are “one of a kind,” and some are “limited runs” (think of prints of paintings, “1/50”). No other NFT contains the same token number, or metadata, and they cannot be copied. Since the metadata, contract address and providence (a.k.a. record of ownership) are all unchangeable, like nearly all things on the blockchain is immutable, creating more value for collectors. In other words, there can only be one of these tokens, and this is verifiable, publicly, on the blockchain.
NFTs are Collectable
Did you collect Magic Cards? Do you have a sweet shoe collection? What if you had a digital analogous that proved authenticity that you could use in virtual reality settings? Like the collector items you covet, NFTs can be held, and sold at a later date. In theory, just like your Magic Cards, their value will only go up in price since they are unique items.
Sports cards are another huge area of collectibles. MLB, NFL, NBA, and NHL cards are another item that can be converted to NFTs and then traded. Authenticity of cards that are bought and sold are now confirmed on the blockchain, thereby easily reducing or eliminating fakes and frauds from the marketplace. Now, having Kobe or LeBron NBA rookie cards, vintage Babe Ruth or Yogi Berra baseball cards, or a Wayne Gretszky hockey card can all be stored on the blockchain rather than risking those items to fire, water, or loss.
Singles, LPs, EPs, albums and memorabilia are another collectable you can find as NFTs. Musicians, such as Kings of Leon, 3LAU, MF DOOM and many others are selling limited editions of their work as NFTs. Imagine having one the original sound files, signed memorabilia, and/or limited editions of songs from your favorite artist? With NFT’s, this is all posible, tradable and serves to better connect artists to their audiences without those pesky middlemen getting in the way.
The most tested use case of NFTs at the moment is in the digital art realm. NFTs are enabling digital artists to have global gallery space, thus increasing their visibility while reducing the barriers to enter the notorious ivory tower that is art institutions. With global gallery spaces where artists can show their work to thousands of non-museum goers, a powerful platform is being built to better sustain artists. As a matter of fact, as of last week, one of the richest artists of our age is Beeple, who sold a digital collage for nearly $70M. A quick twitter search for #NFTart will turn you on to an amazing array of global artists making moves in this emerging ecosystem.
NFTs are Re-sellable
Via the growing community of NFT marketplaces (Mintable, Opensea, KnownOrgin, SuperRare, Rarible), you can print, publish, sell, resell and buy NFTs. For the marketplaces listed above, you need an ethereum wallet to participate. Each marketplace has its unique value proposition, functionality, curatorial style and perks. We encourage you to poke around them all to learn more about this emerging, growing corner of the blockchain ecosystem.
How to Acquire NFTs
The easiest way to get your first NFT is with a MetaMask wallet loaded with some ETH. When you visit the sites that host these digital collectables (links above), you will have the chance to view and review the various items of artists you love, your favorite sports teams, gaming add-ons, collectors edition albums and much more. Once you’ve found that item you want to add to your digital portfolio/gallery/hoard, make a bid or outright buy the damn thing! Once bought, this item will live in your MetaMask wallet and can be transferred to most Ethereum wallets.
The Future of the Non Fungible Token Space
If you create digital content, memes, graphics, music, 3D models, videos, PDFs, anything, really, it can all be turned into an NFT, and if you publish it and someone thinks it has value, you might just make your first sale! NFTs are low-barrier ways for content creators to gain access to a global audience and create works that do not take up physical space nor consume physical resources. As life becomes more virtual, we are sure to see a host of additional use cases for NFTs and an increased demand for them too. Bear fam, keep an eye on NFTs, and learn more via the amazing resources the NFT community is pumping out daily!