I know you came here searching for what exactly NFTs are and why they are creating buzz and making headlines in the news. Don’t worry! I have got you covered. I’ll explain all the details of NFT here. So get ready to clear all the doubts that you may have regarding NFT.
Nothing more than news in the blockchain industry leaves you scratching your head and making you wonder, “What is happening here?” This is what came to my mind first when I read about the NFTs of cats and dogs sold for millions of dollars and how Grimes received the same amount for NFTs.
Since the year NFT started gaining enormous popularity, the blockchain news portals have been filled with headlines about NFT selling for millions of dollars. I was amazed when I read that a picture of apes sold for 10 million dollars. Million-dollar NFT project hacks have been the subject of countless headlines, and the situation of corporate cash grabs has gotten worse.
After reading all this news, you might be wondering: What exactly are NFTs?
After spending hours and hours in research and discussion about NFT, I got to know what it exactly is and how it works. I am going to present detailed information about NFT along with some amazing facts.
Let’s begin with the basic concept.
What is an NFT? What does NFT stand for?
NFT is a short term for “non-fungible token.”
Non-fungible token? Still not clear what it is?
Okay, let me explain. “Non-fungible” basically means that it is unique and irreplaceable. For instance, a bitcoin is fungible because you can trade one for another and have the same value. On the other hand, a one-of-a-kind trading card is non-fungible. If you trade it for another card, you will get something that is completely different.
An NFT, in its most basic form, is a record of the owner of a certain piece of digital content. Any piece of digital content can be minted into an NFT, be it songs, photographs, or works of digital art. Even digital content such as tweets, memes, published articles, and podcasts can be minted.
How do NFTs work?
The Ethereum blockchain owns a majority of NFTs; other blockchains have adopted their own NFT implementation. Like bitcoin or dogecoin, ethereum is also a cryptocurrency, but its blockchain also keeps track of who is owning and exchanging NFTs.
A file is created and stored on the blockchain when someone “mints” an NFT. It means that no one can alter, erase, or in any other way tamper with it. The inability to be interchanged makes an NFT non-fungible. Each NFT is unique and holds a unique ID. Like other currencies, they cannot be divided into smaller units or exchanged for an equal value.
I Wonder: What are the possible and practical use cases of NFT?
The relatively straightforward concept of cryptocurrency has evolved into non-fungible tokens. Modern financial systems provide sophisticated lending and trading platforms for a variety of asset classes, including real estate, lending agreements, and fine art. NFTs are one step toward the reinvention of this infrastructure since they make it possible for digital representations of physical assets. What I mean to say is that unique identity is certainly not a novel concept, nor is the idea of digital representations of real things. But when these ideas are coupled with the advantages of a smart contract blockchain that is impervious to manipulation, they become a powerful force for change.
Market efficiency is arguably the most apparent benefit of NFTs. When the transformation of physical assets into digital ones takes place, this eliminates the need for an intermediary and streamlines the process. NFTs that represent physical or digital artwork on a blockchain do away with the need for middlemen, allowing artists to interact directly with their audiences.
Non-fungible tokens work quite well for identity management. Think about the time when travelers need to present their actual passports at all checkpoints for entry and exit. It is feasible to simplify the entry and exit procedures for jurisdictions by transforming individual passports into NFTs, each with its own unique ID. By extending this use case, NFTs can also be used for identity management in the digital sphere.
What’s worth buying at the NFT supermarket?
NFT can be any digital content, such as photographs, music, artwork, and even tweets and memes. Yes, you heard it right!
What? People are buying tweets?
No one can stop you or anyone from buying tweets. But that is not exactly what I meant to say. A lot of discussion about NFTs concludes that it is a collection of fine art in digital form.
But yes, anyone who likes your tweets could buy it. The founder of Twitter received around $3 million just by selling one tweet.
Could you do a real quick rundown of what the blockchain is?
Well, the term “blockchain” is fairly intricate. The fundamental idea behind blockchains is that they provide a mechanism to store data without having to rely on a single organization or institution to maintain it accurately and securely.
Definitely, some nuances are there, but this is a debatable topic, whether NFTs are part of the blockchain or not. We will dig deeper into it in a bit.
Well, NFT on the blockchain feels like a foreshadowing of the future of NFT.
So do people really think this will be the future of collecting?
No doubt some people really want NFT to be a part of blockchain, like the one who spent close to $390,000 on a Grimes 50-second video or the one who paid $6.6 million for a Beeple video.
You can download the same Beeple video as many times as you want, for which a person paid $6.6 million. That’s awkward! But yes, anyone can copy digital content, including the NFT artworks, as many times as they want.
But, NFTs are made to provide you with something unique that cannot be copied—yes, the ownership of the collectibles. When you purchase an NFT, you get ownership of the digital content. Though it can still be easily accessed via the internet, it is available for anybody to see, listen to, or store. However, a file’s cultural value increases the more it is shared and viewed online.
However, as with physical artwork, the artist can still hold the copyright and reproduction rights. If we look at it from the perspective of a physical art collection, anyone can purchase a Monet print, but the original can only be owned by one individual.
What are your thoughts on the $3,600 Gucci Ghost? Also, what do you think about the Beeple’s pieces that were auctioned at Christie’s and ended up selling for $69 million? By the way, this value is $15 million higher than the price at which Monet’s painting Nymphéas sold in 2014.
Whoever purchases the Monet can truly enjoy it as a tangible item. A duplicate of digital art is actually just as good as the original.
I have heard that earlier NFTs are already over. Didn’t the boom go bust? Like for real this time?
Sales have significantly declined since their peak, but as with almost everything in crypto, there are always some people declaring it to be dead and done with just before a significant spike. Am I saying that NFTs are going to make a comeback soon? Definitely not; don’t take it that way. However, I am sure that certain people from the NFT-based community still feel that they are riding the gravy train.
You might be thinking that I am talking about the apes. Yes, surely, I am.
If you are not aware of the Bored Ape Yacht Club, it’s one of the most popular NFT projects, with apes (who are procedurally created and have special traits) fetching millions of dollars. In addition to developing a spin-off coin and briefly disrupting the blockchain with one of its popular sales, the firm behind the NFT series has also procured other significant NFT brands. And just to remind you, this entire situation resulted from people’s love of boasting that they own a photo of a bored ape.
People like, say, Jimmy Fallon and Paris Hilton also talked about their apes on television in footage that became incredibly uncomfortable and went viral.
This kind of community is not something new. People have formed associations and built their communities based on the things they possess. This is what is happening right now with NFT. One may argue that the community of CryptoPunks, one of the first NFT projects, was a major factor in its success.
What’s the point of NFTs?
The answer to this question largely depends on whether you are a buyer or an artist.
If you are an artist…
As an artist, NFTs may pique your attention because they allow you to market and sell work for which there might not otherwise be much of a market. Additionally, some NFT marketplaces guarantee you to pay a certain proportion each time someone purchases or resells your artwork. This ensures that you will surely receive the benefit if your work gets popular and becomes extremely well-liked.
If you are a buyer…
If you buy an artwork that wins your heart, you are indirectly supporting the artist financially whose work you admire, and this is also true for NFTs. Additionally, when you purchase an NFT, you typically receive some basic usage rights, such as the ability to publish the image online or set it as your display picture. Of course, there are also the bragging rights that come with owning the artwork and having a blockchain entry to prove it.
No, I mean, I’m a collector.
NFT is like any other speculative asset. You buy it in the hopes that its value will increase over time, allowing you to sell it for a profit later.
Is every NFT unique?
Once again, I am saying the same boring statement: “Yes, technically, NFT is a unique token on the blockchain.” But it may be like a van Gogh, where there is only one authentic edition, or it could be like a trading card, where 50 or 100 copies of the same piece of art are available.
Who would spend millions of dollars on what basically amounts to a trade card?
That’s one of the reasons that makes NFTs so messy, I guess. Some people believe it to be the future of fine art collecting (as a playground for the mega-rich), while others treat it like Pokémon cards, (where they are accessible to the general public but also serve as a playground for the mega-rich). If I talk about Pokémon cards, Logan Paul sold some NFTs pertaining to a million-dollar box of the—
Um… please stop. I hate where this is headed.
Okay, so I was telling you that he sold NFT video clips, which are merely excerpts from a video that anyone can watch on YouTube at any time whenever they want, for up to $20,000. A Logan Paul Pokémon card was among the NFTs he sold as well.
Who shelled out $20,000 for a Logan Paul video?
I think a fool and his money parted ways, maybe?
If Logan Paul chose to sell 50 additional NFTs of the exact same video, that would be pretty hilarious.
Mike Shinoda of Linkin Park, who also sold some NFTs with songs on them, talked about that. It’s definitely something that, in his words, “an opportunist crooked jerk” could certainly do. I’m not claiming Logan Paul is the one; what I’m just saying is that be careful who you buy from.
So NFTs are mainstream now?
It depends on in what sense you’re asking this question. The answer is no if you’re asking because, say, my mom possesses one.
“You are talking about those non-fungible token things that I don’t understand.” My mother’s response to my question when I asked her about owning NFTs.
However, all of us have witnessed well known companies and celebrities like Marvel and Wayne Gretzky launching their own NFTs. These NFTs appear to be targeted more at traditional collectors than at crypto-enthusiasts. Altho I don’t think I would call NFTs “mainstream” in the sense that smartphones and Star Wars are for me, they do appear to have, at least to some extent, demonstrated some tenacity even outside of the cryptosphere.
How do the youth perceive them, though?
Yeah, that’s an excellent question. The next generation and their activities interest me. I am curious about what the younger generation is up to, and it appears that some of them have been experimenting with NFTs. A teenager who goes by the name FEWOCiOUS claims that his NFT drops have made over $17 million, although undoubtedly not all have achieved the same level of success. The New York Times spoke with a few teenagers working in the NFC industry, and several claimed they utilised NFTs to practise working together on a project or simply to make some extra cash.
That moment might be worth making a great NFT, right?
This thought also came to someone’s mind, and he minted that clip as NFT. But it wasn’t me! The industry is still plagued by widespread copyright infringement. According to one of the most well-known NFT trading platforms, “plagiarized works, fake collections, and spam” made up more than 80% of the artwork created with its free tool. which, as you may know, does not look well.
Can I buy your article as an NFT?
No, although technically, any digital content can be sold as an NFT (including Quartz and The New York Times articles if you manage to have between $1,800 and $560,000). Deadmau5 and William Shatner sold animated stickers and trading cards featuring Shatner, one of which was apparently an x-ray of his teeth.
Gross. Could I actually purchase someone’s teeth as an NFT?
There have been several attempts to link NFTs to real-world objects, frequently as a kind of verification technique. Nike patented a system called CryptoKicks, which traces the ownership and verifies the authenticity of sneakers using blockchain technology. But no, I haven’t come across any teeth yet. Looking terrifies me.
Terrifies me? What?
A number of marketplaces have emerged around NFT where people can buy and sell NFT, including OpenSea, Nifty Gateway, Rarible, Grimes’ Choice, and plenty of others.
I have heard a connection between kittens and blockchain. What was that?
NFT started working very well when the Ethereum blockchain introduced a new standard for NFT. Of course, one of the earliest applications was a game called CryptoKitties that let players buy and sell virtual cats. Internet, you’re great.
I love kittens.
but… but… not more than the buyer who shelled out over $170,000 for one.
At some point, I also thought that kittens would be used in the games in an amusing way. But the fact is that every NFT seller makes the claim that their tokens are integrated into a metaverse or game.
People responded very negatively when reputable game developers like Ubisoft and the studio behind STALKER indicated they would incorporate NFTs into their games. The companies either had to scrap their plans or drastically reduce the amount of blockchain-related content in their games.
Of course, NFT space has witnessed a few fun experiments ( though I honestly admit that at least one of them made fun of the concept of NFTs). But…Now, listen seriously, one of the most popular NFT-based games features a strange feudal system that has also suffered a catastrophic hack. So, there you go!
At least it’s not digital pet rocks, right?
In fact, some people have purchased NFT pet rocks for tens of thousands or even millions of dollars.
Could I pull off a museum heist to steal NFTs?
That depends, I guess. The fact that blockchain keeps a record of every transaction makes it more difficult to steal and resell than, say, a piece of art that is shown in a museum.
Okay, at least, that’s the theory. The truth is that a huge number of people have had their NFTs stolen by attackers employing a variety of techniques. Of course, hackers aren’t always making the same move again and again. There is a case where someone was duped into signing a transaction they shouldn’t have by standard phishing in the ever-complicated breach of the programmes that govern the flow of crypto.
Should I be concerned about digital art existing in 500 years?
Probably. Bit rot is a genuine problem: images get blurry, files can’t be viewed, websites crash, and people forget their wallet passwords. But the actual artwork in museums is likewise startlingly delicate.
But hold on, being on the blockchain doesn’t make them permanent?
Okay! So this is the real thing, then. Technically speaking, you are referring to a blockchain entry when you use the term “NFT.” However, very rarely is the real media, such as an image, GIF, or blatant infringement of copyright law, actually recorded on the blockchain because it would be too expensive to do so.
Sometimes it uses the cloud service to store the media that NFT refers to, which isn’t exactly decentralized. Since this issue has arisen, people are more concerned about their NFT in case one company goes out of business or changes their URL scheme. People in the NFT space have now been turning to decentralized storage solutions like the InterPlanetary File System, which employ technology similar to torrents. Although it isn’t impenetrable, it is better than storing million-dollar JPGs on Google Photos.
Similar to torrents? So, NFTs are being pirated?
No… Kind of, just hold that thought for a moment. The premise behind IPFS is that files are stored on a peer-to-peer network, which allows them to be stored simultaneously on several computers. Each file is assigned an identifier. When a computer tries to load a file, it requests that the IPFS network provide it with the file bearing that ID. Any computer storing that file can say, “Yes, here it is!”
The media link is baked into the token when creating an NFT. If IPFS stores that link, it is more permanent than, say, a file stored on a regular server.
Of course, a distributed storage system is not always perfect. Experts have cautioned that files may still be stored on a single computer and could be lost if the hard drive fails.
Okay, so what were you saying about pirating?
Someone built a website named The NFT Bay as a kind of art project, where they posted a torrent pointing to a 19 TB ZIP file that purported to contain each and every NFT on the Ethereum and Solana blockchains. Many people doubt whether it was really a treasure trove of NFTs (if it could be referred to as “treasure”), but theoretically, blockchain stores records of all the NFTs being minted, and you can download the media an NFT points to.
True or not, this amazing piece of performance art sparked a conversation about the right-clicker mindset.
Sorry, but what on Earth is a right-clicker mindset?
Ah, sorry. NFT supporters sometimes use the jesting term “right clicker” to mock others who simply don’t get it. The idea is that if you believe that simply right-clicking or downloading (or pirating) a JPEG will truly make you a major part of an NFT, you are utterly missing the point.
Has anyone ever experienced hurt feelings after hearing that they have a right-click mentality? Most likely not, but their rolling eyes might make them a little painful.
I want to make the most of blockchain technology. Can I purchase NFT using cryptocurrencies?
Yes. Probably. Most of the market places accept Ethereum. Technically speaking, it depends on the person who is selling NFT. The seller can ask for whatever currency they want.
Will trading my Bitcoin NFTs cause global warming?
It’s absolutely something to watch out for. NFTs use a lot of electricity since they share the same blockchain technology as some cryptocurrency platforms that consume a lot of power. Although efforts are being made to mitigate this problem, the majority of NFTs are still connected to cryptocurrencies, which produce significant amounts of greenhouse gas emissions. After learning about the potential impacts NFTs could have on climate change, there have been a few instances where artists have decided not to mint NFTs or to cancel upcoming drops.
Can I use an underground art cave or bunker to store my NFTs?
Well, you can keep NFTs in digital wallets just like cryptocurrencies (remember, the wallet must be NFT-compatible). Though you could always store the wallet on a computer in a secure underground bunker.
Is there any TV show that is somehow related to NFT?
It may surprise you, but you have choices! Dominion X is a show that Steve Aoki is producing based on a character from an earlier NFT release. The show’s website claims that it will be an episodic series launched on the blockchain (the first video clip is on OpenSea), and there are already hundreds of NFTs connected to the programme.
Another programme that makes use of NFTs as a form of ticketing system is Stoner Cats, which features Mila Kunis, Chris Rock, and Jane Fonda and is about cats that get high. There is only one episode available for now, but you need a Stoner Cat NFT (as a TOKEN) to watch it.
I think you are tired of typing “NFT”?
Yes, of course!