There are times when blockchain explosions come by, and they leave you wondering, “what on earth is this!?” That feeling often comes if you’re not all too obsessed with that part of the world, and it definitely came by when you first read about the digital art that was auctioned for $69 million- and the buyer received no form of artistic composition but simply a unique digital token- the NFT.
So, what are NFTs? It took us hours of reading and deciphering and even a little crying to get here, and now we bring you a quick summation of it all so that you don’t have to hit your heads trying to understand it.
Let’s start from scratch.
Table of Content:-
- What is an NFT?
- How do NFTs Work?
- Why are People not Creating Copies of Digital Art?
- So, People are Literally Paying Millions, Just for a Token that is not Even Tangible?
- Now, I’m Sure You’re Thinking, “What is the Point?”
- Will Digital Art Still Be Around in a Few Hundred Years?
- How Can I Buy NFTs?
- Just Because You’re Capable of Buying NFTs, Should You Buy Them?
- Can I Use Cryptocurrencies to Get My Hands on NFTs?
- Will Buying a Kitty Video Make Icebergs Melt?
- Are NFTs Just a Bubble?
What is an NFT?
NFT stands for Non Fungible Tokens.
I know that explains literally nothing, nothing at all. So, the term non-fungible refers to something absolutely unique, different, and irreplaceable. For example, a $10 bill is fungible- it can be replaced by two $5 bills. A one of a kind item is, on the other hand, non-exchangeable for anything.
That is exactly what NFTs are- while they can be bought and sold, just like anything else, they don’t have a physical form of their own.
How do NFTs Work?
Think of a painting, Mona Lisa, for example. It is one of a kind, and hence, very valuable. With NFTs, the artwork is tokenized.
This means that a digital certificate is created that justifies the ownership in terms of a particular artwork, and this certificate of ownership can be bought or sold. Who owns what is recorded on a ledger: the blockchain.
This is not forgeable since it is maintained by thousands of computers around the world.
NFTs also benefit the creator of artwork and can act as a means of passive income down the line by earning a cut from income earned by future sales of the token.
Why are People not Creating Copies of Digital Art?
Honestly, there’s nothing stopping them, and they are. For example, the Beeple’s art that was sold for $69m has seen unlimited replicas.
But, you see, the buyer of the NFT has a specific token that proves that they are the original holders of the artwork.
You can compare the replicas to real-life copies that the artist signs.
NFTs are held on the Ethereum blockchains and are supported by others as well.
NFTs are minted from
- Avatars and Gaming
- Sports highlights
So, People are Literally Paying Millions, Just for a Token that is not Even Tangible?
Short answer: Yes, they are. Wild, is it not?
Long answer: NFTs are worth millions. There are people who’re selling tweets, music, drawings, and more. Anyone can tokenize their work and sell it. While that does not sound like a big deal, people have been rushing to buy art for millions. The focus of NFTs has shifted to digital art, and people are hoping that NFT becomes the new art collection, or their millions will go to waste. Here are a few instances of mind-blowing buying of NFTs.
● The founder of Twitter sold a tweet for $2.9 million. And while that sounds bizarre, it truly did happen.
● The Gucci Ghost was sold for $3,600. The price gives me more creeps than the ghost itself.
● Remember that 50-second video by Grimes? Yeah, the one with lights and nature and angels- that was sold for $390,000.
● The digital art by Beeple, as mentioned before, was sold for a whopping $69 million.
Of course, you can still view all of this, but as mentioned before, NFTs give you the ownership of the work, and that cannot be duplicated.
Do you like cats? Not as much as the buyer of an animation of a Nyan Cat that was sold for more than $500,000.
More cats? One of the first uses of NFTs was over CryptoKitties, a game that allows the trade of virtual kittens. One person paid over $170,000 for a kitten. Many games allow the buying and selling of NFTs.
Now, I’m Sure You’re Thinking, “What is the Point?”
Now, now, calm down. I know the copy and the original are the same when you consider digital art. So, what is the point? What is all the rage about?
That truly depends on the perspective. If you’re an artist, the point is entirely different, and if you’re a buyer, it is a whole different ball game. There’s also the category of a collector. Whichever the case, I’m here to explain to you why you should be interested in NFTs.
Suppose you’re an artist, congratulations. You, my friend, are reaching for the stars. You see, NFTs give you a whole new set of opportunities. There are times when there is not much space for your work in the market. With NFTs, quality work has the potential to come into the spotlight and earn millions. Any cool idea is welcome and appreciated monetarily.
Also, there’s the added advantage of changing hands. With physical art, once you sell your painting and it is resold, you don’t really get a cut. But, with NFTs, each time your work changes hands, you partly get benefits. Pretty cool, I’d say.
If you’re a buyer, bragging rights, supporting your favourite artists, and basic usage rights are some of the fundamental advantages. Also, it can be considered as an investment- when the prices go up, you earn. Of course, there’s an element of risk, but is that not the case with investments in general?
Now, if you’re a collector, you can, of course, buy it and hope that one day, it’ll turn into your gold mine.
Will Digital Art Still Be Around in a Few Hundred Years?
Maybe. Since it is not physical, a bit of rot applies to it. Image qualities deteriorate, file formats change and sometimes become inaccessible, people cannot recall passcodes and more.
This is similar to how physical art grows brittle and fragile over time.
So, what happens only time will tell. Chances are that digital art thrives with technological advancements and there occurs betterment of digital art or it may so happen that it disappears altogether. Either way, it’ll be an extreme- a lot better or non-existent.
How Can I Buy NFTs?
First and foremost, get a digital wallet that allows you to get your hands on NFTs as well as cryptocurrencies. Depending on whoever you’re buying from, you might need a bit of Ethereum. You can buy cryptocurrencies using your credit card on various platforms.
When you research your options, keep in mind the fees.
You can easily purchase NFTs via NFT marketplaces. All you have to do is register and occasionally pay fees, and you’re all set.
Here are a few famous NFT marketplaces.
● Rarible: A democratic, open marketplace that allows buying and selling. RARI tokens allow holders to weigh in on various sitewide features.
● OpenSea.io: It says it is a holder of “rare digital items and collectibles.”
● Foundation: Here, artists need upvotes or invites to post their art. The entry cost and necessary purchase of “gas” ensure high-quality work.
While these sites are popular, you must always research before you buy. Impersonation is not uncommon in the virtual world, and we don’t want that to happen.
You can bid on items as is done on eBay or you can choose platforms that allow you to buy and sell NFTs for a fixed price. If you choose OpenSea, you can initially only purchase DAZN NFTs.
Pack and art drops have been becoming a common occurrence for selling rare NFTs. They require you to sign up and fund accounts in order to not miss drops. These drops come and go within seconds so you need to prep everything in advance.
Just Because You’re Capable of Buying NFTs, Should You Buy Them?
Maybe, maybe not. Investment here is a personal decision since they are risky and come with a sense of uncertainty. Their future is unknown, and they have no past to judge. Investments in small amounts are probably the best bet right now.
Besides, the value of an NFT is completely based on how much is being asked for it or what someone is willing to pay for it. Demand drives further than the fundamentals of technical and economic indicators.
Meaning, there are chances that the prices of the NFT that you hold will skyrocket, and your NFT will spin gold out of straw, but there are also chances that you may not be able to sell your NFT at all.
If you are willing to buy NFTs, do so with proper research and understood risks, and you’re all set to go. If you decide to look the other way while buying NFTs, you may be in for shocks- and losses.
Can I Use Cryptocurrencies to Get My Hands on NFTs?
Surely. Many marketplaces accept Ethereum. If you already have an account in a cryptocurrency exchange, all you need to do is purchase Ethereum and send it to your marketplace account. Besides, anyone can sell an NFT. This means the mode of transaction is based on what’s being purchased and any currency can be used.
Will Buying a Kitty Video Make Icebergs Melt?
You see, anything of the sort will contribute to the carbon footprint. The NFTs definitely use blockchain technology, and where that is involved, energy is inevitably consumed, and boy is it consumed- NFTs are responsible for the emission of greenhouse gases and consume loads of electricity.
There are researchers that are constantly trying to avoid this, but so far, there has not been a breakthrough. Surely there will come a time when this will not be a concern, but for now, buying that NFT will definitely leave as much a footprint as any other internet-based or electricity consuming activity.
Are NFTs Just a Bubble?
Mike Winkelmann, aka Beeple, said, “I actually do think there will be a bubble, to be quite honest.
“And I think we could be in that bubble right now.”
There are others who are even more pessimistic about this.
To David Gerard, buying NFTs is simply buying “official collectibles” and nothing more.
There’s a lot of scepticism, and it is not going anywhere, but technology always comes with it.
So, maybe it’ll stay for good, or maybe the bubble will burst. Whatever way things go, only time will tell.