NFT in Layman’s Terms

by Bianca |
NFT in Layman’s Terms

NFT in Layman’s Terms

 

NFT = Non-Fungible-Token. 

 

Fungible = able to be replicated or replaced

 

NFT = a token that can’t be reproduced or replaced; it’s unique

 

They’re founded on blockchain technology, which in sum is a very secure system of recording and monitoring transactions. Multiple blockchains support NFTs, but the biggest provider by far is Ethereum

 

NFTs are digital ‘tokens’ - anything from drawings to trading cards, music to videos, and apparently now, Tweets

 

So for example, an artist creates a digital artwork of a warm sunny day, AKA an NFT. They put it up for sale, and people can bid to own it. Here’s the mind-boggling part -- you’re only purchasing ownership of the thing. It doesn’t stop other people from seeing or experiencing the NFT basically in exactly the same way. (Unless there are unlockable features). 

 

Here’s an example. The singer Grimes made a 56 second video NFT and put it up for sale. It fetched $389,000 at auction. BUT ANYONE CAN JUST SEE THE VIDEO. IT’S AVAILABLE ONLINE FOR FREE TO LOOK AT. So effectively, the auction winner, Aito, is just getting bragging rights and ownership rights. 

 

Look, I get it, but I also don’t get it. But hey, it’s a hot tech moment. Seriously hot.

 

The computer systems needed to mine the Blockchain use crazy electricity and are terrible for the environment. The more NFTs are popularized, the worse it is for our planet. Thankfully lots of artists are becoming hip to this and changing their plans to get involved. 

 

All I’m saying is, for me, planet trumps personal glory. But hey, clearly I’m the minority here - NFTs are exploding. Within three months this year, the market cap value grew 1,785%. That’s not a typo. More than 2 billion dollars was spent on NFTs in just Q1 this year.

 

How can you collect NFTs?

 

Whether you’re looking to browse or for a specific drop from an artist, the first step is establishing the marketplace you’re going to be working with. 

 

Once you’ve got that down, you’ll need to have a compatible crypto wallet like Metamask, Trust or Enjin. These come in the form of apps you can download on your phone or open in your browser. Make sure that the wallet supports the crypto currency you need to purchase on your chosen marketplace. 

 

Next, sign up for the marketplace you’re interested in and connect your crypto wallet. You’ll usually need to have some crypto purchased in your wallet, ready to use in the marketplace.

 

What marketplaces for trading are there?

 

Opensea, Rarible, Mintable and Nifty are all popular forums. 

 

 

Can I create my own NFT?

 

Sure, go ahead.

 

First, you need to decide which blockchain you want to issue your NFT. Ethereum is the most popular, but there’s Binance Smart Chain, EOS, Tron and more. Check out the marketplace you’re interested in listing on, as you’ll need to make sure that the blockchain you choose is compatible with the platform.

 

Next, connect your crypto wallet with the platform. You’ll usually need a crypto balance in order to list your digital creation, but check out each marketplace for fees. Opensea for instance, doesn’t charge to create, whereas others do. It’s usually a combination of listing and sales fees that you’ll need to pay. 

 

However.

 

This is pretty cool. Artists can passively earn royalties from what they sell for every subsequent sale of that token or item. 

 

Example: You make a scary cat NFT, then sell it to bobsyouruncle94, making some money.

 

A year later, bobsyouruncle94 sells scary cat to gangr33n, and you get a percentage of the sale!

 

Then if gangr33n sells scary cat because they just can’t handle it, you get another percentage!

 

What is the most expensive NFT?

 

Beeple’s “The First 5,000 Days” sold for over $60 million dollars, which was totally unheard of. It remains the most expensive sale of an NFT to date. In 2007, the artist Mike Winkelmann (pseudonym Beeple) committed to creating one digital artwork a day, calling them ‘Everydays.’ To date, he’s still going. This NFT was a collection of the first 5,000 artworks he created throughout this time.