NFTs – Napkin Finance

NFTs

(Not So) Real World

An NFT, or non-fungible token, is a code that says you own a unique digital item.

Fungible vs. non-fungible

An NFT is a type of digital collectible. They first hit the market around 2015, but their popularity has recently exploded.

To understand NFTs, it’s important to first know the difference between fungible and non-fungible things:

Fungible: You can easily count and interchange it. For example, you can trade two $5 bills for one $10 bill and end up with the same amount of money.
Non-fungible: Completely unique and isn’t interchangeable. Anyone can download and frame a picture of the Mona Lisa, but there’s only one original painting.

The unique nature of an NFT—and the scarcity that comes with it—is part of what makes them so popular (and expensive).

Why popular

Buyers like NFTs in part because it’s an investment option. In the future, if the price of an item goes up, the buyer can sell it and make a profit. Of course, like any investment, NFTs are only worth what someone is willing to pay and no one can guarantee the future value.

Creators like NFTs because it gives them a direct market for selling their work (rather than having to go through a middleman). Plus, they gain greater control over their works and can even make royalties every time someone buys or sells their NFT.

How to buy

Buying an NFT is a lot like getting something off eBay (except at the end of the day you usually won’t get anything physical in the mail).

Get some cryptocurrency
(most NFTs are priced in ether, the cryptocurrency of the Ethereum blockchain)

Visit an NFT marketplace
(e.g., Rarible, Mintable, OpenSea, NBA Top Shot)

Bid or buy the item right away
(depending on how it’s offered)

Pay for the item with cryptocurrency

What you’ll end up paying includes both the item cost and any fees. These can include a set percent of closing costs or cover the energy required to actually process the blockchain transaction.

How to sell

Pretty much anyone can put something up for sale on an NFT site. Here’s how it works:

  • Step 1: Create a digital wallet and buy some cryptocurrency (you’ll need this to cover the cost of creating your listing)
  • Step 2: Go to an NFT marketplace
  • Step 3: Connect your wallet to the marketplace
  • Step 4: Upload your digital file
  • Step 5: Provide some details about the file, such as whether it’s an original or a copy
  • Step 6: Decide if you want to build in royalties
  • Step 7: List the item and wait for it to sell

Although NFTs are the hot thing right now, just because you list something doesn’t mean anyone will buy it. People tend to be looking for really rare collectible items offered by celebrities or big reputable companies. Remember, bragging rights are a pretty important part of NFTs.

Future uses

Many experts believe that in the future we could use NFTs for almost anything, from event tickets to passports. That’s because it’s really easy to verify ownership on the blockchain and really hard to forge or change the owner (without their permission).

Conclusion

An NFT is a code listed on a blockchain that says you’re the owner of a unique digital item. The most common NFTs are works of art, albums, trading cards, and avatar accessories. People purchase them not just to brag about something cool and one of a kind but also in hopes the NFT will increase in value and net the owner some money. Anyone can upload and sell an NFT, but that doesn’t mean there are buyers out there. Plus, an NFT is only worth as much as someone is willing to pay. In the future, experts think NFTs could have many practical uses in our day-to-day lives.

Fun facts
  • The auction house Christie’s sold its first completely digital piece of NFT art, a collage of 5,000 smaller works created by digital artist Beeple, for $69.3 million.
  • Twitter CEO Jack Dorsey put his first-ever tweet up for NFT sale, with proceeds going to charity.
  • One of the most popular NFT marketplaces is the NBA’s Top Shot where people are spending tens of millions of dollars on highlight reels (basically the new digital trading card).
Key takeaways
  • An NFT is a code listed on a blockchain that says you own a one-of-a-kind digital item.
  • Anyone can create one to sell, and you’ll most frequently find works of art, trading cards, and albums.
  • People buy NFTs in the hope that they’ll increase in value and can be sold for a profit.
  • Artists like NFTs because it gives them more control over their works.
  • In the future, some experts think we might be able to use NFTs for many activities, such as attending a concert or traveling.

References

https://www.nbcnews.com/tech/tech-news/nft-boom-digital-collectibles-rcna430
https://www.bbc.com/news/technology-56371912
https://www.npr.org/2021/03/05/974089381/whats-an-nft-and-why-are-people-paying-millions-to-buy-them?t=1616330200489
https://www.investopedia.com/non-fungible-tokens-nft-5115211
https://www.nytimes.com/2021/03/11/arts/design/what-is-an-nft.html
https://www.reuters.com/article/us-crypto-currency-nft-explainer-idUSKBN2B92MA
https://www.entrepreneur.com/article/366648
https://messari.io/article/explain-it-like-i-am-5-nfts?v=2021-03-12
https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
https://www.9news.com.au/technology/nft-explained-what-are-they-and-why-are-they-so-expensive/c8407d42-9472-4411-be32-266ce946f847
https://www.theverge.com/2021/3/20/22334527/nft-scams-artists-opensea-rarible-marble-cards-fraud-art
https://edition.cnn.com/2021/03/17/business/what-is-nft-meaning-fe-series/index.html
https://news.crunchbase.com/news/the-market-minute-what-you-need-to-know-about-nfts/?utm_source=cb_daily&utm_medium=email&utm_campaign=20210317&utm_content=intro&utm_term=content
https://www.veradiverdict.com/p/nft
https://ethereum.org/en/nft/
https://www.cnbc.com/2021/02/28/230-million-dollars-spent-on-nba-top-shot.html
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