What is an NFT? 

Nov 26, 2021

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WHAT IS AN NFT?

Ever since digital artist Beeple sold his NFT work for $69 million at a Chrisite’s auction, people have been wondering if they should buy NFTs. Before starting your NFT collection it’s important to understand what an NFT is, and why they are an important digital asset, foundational to the digital economy and part of the growing metaverse.

WHAT IS A NON FUNGIBLE TOKEN? 

To understand what a NFT (non-fungible token) is, you need to understand the difference between substitutable and non-substitutable assets. An NFT is a one of a kind digital file. What makes NFTs powerful is the rules that can be attached to them in smart contracts.

Unlike physical artwork and other physical assets, digital assets - when attached to non fungible tokens using blockchain technology - can be set up with a variety of useful options to protect those owning NFTs, as well as the NFT creators.

  • Substitutable assets are objects that can be exchanged directly with each other, such as 1 ounce of gold, Bitcoin, 1 barrel of oil, and US dollars.  
  • Non-substitutable assets are assets that cannot be exchanged for each other. Non-substitutable assets include land, art, and trading cards.

By tokenizing irreplaceable assets on the blockchain, users can verify the authenticity of their NFT collections. When it comes time to sell NFTs, these assets are traded through NFT digital collections, this is typically done on an NFT marketplace (unless you are Beeple) art, and in-game items, but the application for NFT’s extend far beyond digital art. future uses are endless. 

It is important to note that irreplaceable tokens alone are not worth it. The value that comes from an NFT comes from the media connected to the NFT. For example, CryptoPunk NFTs are as valuable as CryptoPunks, and Decentraland properties are valued in the virtual world depending on the location and size of the property.

BENEFITS FOR NFT OWNERS

Here are some key benefits for owner of non fungible tokens from ethereum.org:

  • You can easily prove you own it.
  • Proving you own an NFT is very similar to proving you have ETH in your account.
  • For example, let’s say you purchase an NFT, and the ownership of the unique token is transferred to your wallet via your public address.
  • The token proves that your copy of the digital file is the original.
  • Your private key is proof-of-ownership of the original.
  • The content creator’s public key serves as a certificate of authenticity for that particular digital artefact.
  • The creators public key is essentially a permanent part of the token’s history. The creator’s public key can demonstrate that the token you hold was created by a particular individual, thus contributing to its market value (vs a counterfeit).
  • Another way to think about proving you own the NFT is by signing messages to prove you own the private key behind the address.
  • As mentioned above, your private key is proof-of-ownership of the original. This tells us that the private keys behind that address control the NFT.
  • A signed message can be used as proof that you own your private keys without revealing them to anybody and thus proving you own the NFT as well!
  • No one can manipulate it in any way.
  • You can sell it, and in some cases this will earn the original creator resale royalties.
  • Or, you can hold it forever, resting comfortably knowing your asset is secured by your wallet on Ethereum.
Have you seen this:
Fractionalising NFTs — Platforms Review

BENEFITS FOR NFT CREATORS

You can easily:

  • Prove you’re the creator.
  • Determine the scarcity.
  • Earn royalties every time it’s sold.
  • Sell it on any NFT market or peer-to-peer. You’re not locked in to any platform and you don’t need anyone to intermediate.

THE BEST NFT PROJECT TO INVEST IN 

Certain non-fungible tokens (NFT) investments have far outstripped cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) in recent months. Celebrities such as Jimmy Fallon, JAY-Z, and Gary V have bought NFTs and posted them on their Twitter profiles, increasing the demand for limited edition token art. Find out more about the NFT epidemic and how to start investing today.

Invest in CryptoPunks

CryptoPunks was created in 2017 as one of Ethereum’s first irreplaceable token projects. Each punk was generated by an algorithm and the collection was limited to 10,000 punks. Human punctures are the most common, but there are other types of punctures as well. There are only 9 alien punks, 24 salpunks and 88 zombie punks. Alien Punk has raised over $ 8 million at auction. 

Gaming As An NFT Investment

Axies is a creature used to play the popular blockchain-based game Axie Infinity. You need three axes to play the game. Of course, as the platform attracts more users, the price of Axies will rise. Axis prices vary by feature but are available today for about $ 200.

Kart Racing League is a Sonic-inspired universe where anyone can earn tokens through skillful gameplay and contributions to the ecosystem. Players can compete with each other in an online multiplayer format to collect, exchange and develop playable NFT characters. The Kart Racing League combines exciting arcades with the best of fast-paced competitive kart racing to collect power-ups and speed boosts while allowing players to race online in intense multiplayer races on brilliant tracks. Allows you to compete. The main difference between KRL and traditional kart racing games is that the economic design of the blockchain is used to reward players for their contributions to the ecosystem. This new game model is called “play to earn”.

Have you seen this:
Millennial Millionaires Are The Most Bullish On Crypto, Survey Finds

Avatars as NFT Investments

Bored Ape Yacht Club is similar to CryptoPunks in that these NFTs are widely used as online avatars. The project includes cartoon monkeys with various characteristics and shortages, the cheapest monkeys cost around 45 ETH ($ 150,000). Just a few months ago, you could get a monkey for about 1 ETH, making it one of the most valuable NFT goods in the industry. Since its inception, BAYC has sold token holders Bored Ape Kennel Club (BAKC) and Mutant Ape Yacht Club (MAYC) NFT, with minimum prices of 3 ETH and 6 ETH, respectively. The Bored Ape Yacht Club also hosts exclusive events for token holders, including private concerts with The Strokes and Lil Baby in New York City.

HOW TO BUY NFTS

The best place to buy one of a kind digital artwork is OpenSea. Most non-fungible tokens are sold on this NFT marketplace, and you can buy all of the above NFTs via the platform (except CryptoPunks). To purchase CryptoPunk, you need to use the Larva Lab website. To use OpenSea, you need two Ethereum wallets and Ether tokens. The best Ethereum wallet for OpenSea is MetaMask. It’s easy to set up from Google Chrome and you can easily connect to your website from your Chrome browser. If you don’t have a cryptocurrency account yet, you’ll need to create one to buy Ethereum.

HOW TO STORE NFTS SAFELY

If you have a large investment in CryptoPunk, Meebit, or other NFTs, you should consider a secure storage solution for your tokens. MetaMask is generally considered secure, but your account could be hacked because your wallet is connected to the internet. The hardware wallet is the perfect solution. Hardware wallets like the Ledger Nano S store thousands of cryptocurrencies, including irreplaceable tokens. These devices store cryptocurrencies offline, so you can’t steal money over the internet.

This post was written by Bryce MacCarthy & Steven Miller

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