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The Big Question - What is NFT?

Published 08 / 03 / 2022 by Summertime Studios
Beginner

 

Surely you’ve heard of Bored Ape Yacht Club (BAYC) or CryptoPunks and wonder how a .png file can be worth up to $23.7 million?

After shocking the art and gaming world in million-dollar auctions, NFTs have exploded into the mainstream as more celebrities and big brands joined the ride. Adidas most recently launched an NFT collection of both physical and digital products in collaboration with BAYC, which was sold on 17 December and available in 2022. Even McDonald's, KFC, and Coca-Cola have added NFTs to their marketing strategy.

 

Ok, Let's Get To The Point...

With all the recent NFT craze, it’s time for you to get familiar with it too.

Non-Fungible Tokens (NFTs) are unique tokens linked to digital benefits which provide proof of ownership. 
Essentially, it is the buying, selling, and collection of anything digital such as a drawing, meme, tweet, picture, or video. Twitter co-founder Jack Dorsey sold his first ever tweet as an NFT for more than $2.9 million.

Welcome to the modern world ~

 

Why Are NFTs Getting So Much Attention?

NFTs have actually been around for more or less a decade. They first appeared in the cryptocurrency industry in 2012/2013, yet it was not until 2017 that they entered the Ethereum Blockchain. Despite Ethereum being the most popular blockchain, it is not the only one on which tokens can be built and traded. 

NFTs rise to stardom can be credited to celebrity connections and exclusivity. For example, Logan Paul offered supporters the chance to win first-edition packs of Pokémon cards if they purchased his NFT collector card. (Psst, have you heard of his $3.5 million worth first-edition Pokemon cards which turns out to be fake?! G.I. Joe trading cards < Pokémon cards, agree?)

 

Fungible vs Non-Fungible?

Fungible Tokens (BTC/SOL)

Non-Fungible Tokens (NFTs)

Interchangeable
(they hold the same value, like currencies)

Non-Interchangeable
(no two NFTs are the same)

Uniform
(similar to currencies)

Unique
(each has a specific uniqueness;
often used in games, collectibles, artworks)

Divisible
(can be split into smaller values infinite times)

Non-Divisible
(cannot be split into parts; usually illiquid)


True, you can just “right click, save as” the digital asset without actually buying it. 
So why would you want to pay for it?


Just like any other collectibles, only the original asset has value. 
NFTs use smart contract technology to store unique information on the blockchain.
So each NFT has only one verifiability. This allows transfer of assets to be safer, more efficient, and verifiable

 

What Are NFTs Used For?

Blockchain technology and NFTs enable artists and content creators to monetize their wares. For example, artists who used to paint on canvas and rely on galleries or auction houses to sell their art, no longer need to do so. Instead, the artist can sell directly to the customer as an NFT and keep more profits. To add, artists can also receive royalties for their works so they'll receive a percentage of sales whenever their art is transacted/sold to a new owner - talk about hitting two birds with one stone! This is definitely a winning point since artists usually do not receive future proceeds once their art is sold. 

There are other ways to make money with NFTs. Brands like Taco Bell have listed themed NFTs each priced at $1, just like tacos IRL; proceeds were used for charity-purposes and buyers received e-gift cards. Their NFT art sold out in minutes, with the highest bids coming in at 1.5 wrapped ether (WETH) which is equal to $4,594.97 at the time of writing.

A decade ago, we probably would've walked away after looking at Nylon Cat, the GIF of a cat with a pop-tart body hopping around, thinking it's worth nothing. This February, a Nylon Cat sold for nearly $690,000. 

And not just that, a single LeBron James Top Shot managed to fetched more than $200,000.
Ok, so you get the big picture - NFT is just like investment. You buy if you see value in it (or you fall in love with the art & have extra money to spare, by all means do as you please). But it's not child play here. It's growing rapidly... and seriously. So make sure you don't miss your chance.

 


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