NFT EXPLAINED 🎓
NFTs stand for 'Non-Fungible Tokens' - digital properties or assets that are unique and you can't 'change'. For instance, bitcoin is fungible or interchangeable - bitcoins bought and sold are the same and equivalent. NFTs, on the other hand, are unique with a license tied to that particular asset. In their most basic form, NFTs represent units of data stored on the blockchain that can be traded. NFT ownership can therefore be tracked via a digital signature tied to that asset.
While it has gained huge traction in the purchase and distribution of arts, NFTs have wide-spread applications in fashion, music, invoicing, medicine, etc. Photos, videos and audios can all be converted to and traded as NFTs.
While you can easily make or take pictures as JPEGs and distribute via normal channels, to convert it to an NFTs you will need to mint it on the blockchain. Popular platforms for minting NFTs are Ethereum and Solana. After they are minted, NFTs are sold on NFT marketplaces like OpenSea, Rarible.
Cryptopunks — a very popular NFT of 10,000 uniquely generated characters.
Note that ownership of an NFT does not confer copyright or intellectual property. While the buyer owns that particular asset, the creator of such asset retains the copyright and can create several more NFTs of that same work. Each of these NFTs are considered unique with ownership licenses issued to the buyers. In essence, you own a representation of the work. Not the copyright. Take for instance, the hit NFTs - Cryptopunks - while you can own a particular one out of the 10,000 in existence, there are 9,999 others minted by the creators for sale to other buyers.
The pricing of NFTs is based on popularity, rarity, utility and community. Popular but rare NFTs are usually very expensive. Just ask the artist, Beeple. His collage 'Everydays: The first 5000 days' sold at an auction for $69 million.
Beeple’s ‘Everydays: The first 5000 days’ — one of the most expensive NFTs
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Cryptopunks are also very expensive because they are popular and rare. Some NFTs offer you access to exclusive clubs, events, networks and are therefore expensive based on their utility - the access it can buy you into an exclusive club of owners. The Bored Apes NFTs fit into this latter category and pricing is also driven by the massive community built around the NFTs.
Bored Apes Yatch Club — took exclusivity to a new height.
That said, beware of NFT scams. How do you identify them? First, the art may not be unique original. For instance, because 'Bored Apes' became a hit, someone may digitally produce 'Bored Lions' and start selling massively with hype. Some of these scam NFTs copy and paste roadmaps of other successful projects. Usually when persons have subscribed and bought the NFTs, some perform a rug-pull - delete everything making investors lose money. Do your own research. Find out the individuals behind these projects and check their credibility. Some celebrities have promoted NFT scams so don't judge by the huge followership. Only invest in projects you believe in, projects with utility and projects led by experienced individuals with character.
NFTs present a new aspect of ownership of digital assets. The fact that these assets are uniquely tokenized with no upward cap to pricing makes it a viable money-making opportunity especially if you can discover gems early and flip them for a fortune.
©Kelvin Alaneme, 2022.
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