YOUR INTRODUCTION TO THE WORLD OF NFTS
So you've been hearing about NFTs and blockchain and a club containing apes that are bored...
Some questions that may be on your mind include;
- what do apes have to do with cryptocurrency?
- is NFT a new type of coin?
- has the world gone insane?
A definite yes to the last question, but for the other two... do not fret, for I am here to break it down for you.
Welcome to NFT 101.
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Image source
So what exactly is this NFT everyone is talking about?
NFT stands for Non-Fungible Token.
There, that's it, lesson over. Thank you all for coming...
Just kidding, first of all, let's define the terms one by one.
Fungible can also be termed "replaceable", so Non-Fungible means Non-replaceable, It means there's only one of it.
For example, you have a sock. That sock has been with you through thick and thin.
There might be a million variations of that sock, there may even be one that looks exactly the same, but what makes your sock unique are the tears the fade and the horrific smells.
There's only one kind of your sock in the entire world.
It cannot be replaced because you're not going to get an exact copy. Even if you get an exact physical copy , the earlier mentioned characteristics cannot be replicated.
It is one of a kind.
It is Non-Fungible.
Examples of Non-Fungible things:
The Mona Lisa, the Eiffel Tower, your underwear that you should have thrown away a long time ago e.t.c.
Examples of Fungible things: a cup of rice, a plastic chair.
An item can become non-fungible when certain value is attached to it by a significant collection of people
That is the principle that NFTs operate on.
Now that we've wrapped up the Non-Fungible part... let's talk about the Token part.
Let's use an example to explain:
Say you draw a nice picture, very cute, one of a kind and all, and your friend says,
"Hey I like that picture and I want it."
And you're like,
"Sure but I want $10 for it."
Then your friend agrees to pay you but only in cryptocurrency.
This is where the blockchain comes in.
Now the blockchain is a whole other topic on it's own, but a quick definition to make us understand:
Blockchain is a shared record of transactions in a cryptocurrency network.(that's an extremely basic way to put, it's actually not a simple topic at all. If you think math is hard, try learning about the blockchain.)
So that payment your friend made to you will be recorded and a digital certificate of transfer of ownership is pulled up... congrats you have sold your first NFT.
Your art is now a token which your friend owns.
The main difference between this transaction just mentioned and actual NFT transactions is that NFT art is only present online... in the blockchain.
Now you might be thinking, this is ridiculous...
What if someone just draws an exact copy?
What if someone just right clicks and saves your image?
it's the same thing right?
Well apparently not...
Okay, so with the example of the Mona Lisa, a lot of people have drawn it to perfection;
but they are still not worth anything... and that's because the original Mona Lisa has a value assigned to it by people in that field.
Now there is a popular NFT collection — The bored ape collection.
NFTs owned by bored ape yacht club
Source
It is worth millions of dollars as of now; and let me be honest, I have lots of people that can make art way better than that, but it doesn't matter...
Just because a group of people — the blockchain and cryptocurrency community — has agreed that this collection has value, it automatically does.
You might wonder why someone will pay thousands to millions of dollars for weird ugly monkey art. It is all for resale value. The main purpose of purchasing NFTs is just to resell them at a higher value.
It is all business.
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ADVANTAGES:
- NFTs are open to all, even though it happens in the cryptocurrency space, you don't need to be super knowledgeable about Bitcoin or dogecoin or squid game coin or whatever.
A NFT my friend made
Source
You can make a lot of money.
It's a unique experience and might be a setting stone for the future. (Ala metaverse)
DISADVANTAGES:
It is more of gambling than investment. if you buy it and can't sell it at a higher price... well...
You are not actually the owner, you just have ownership. That means anyone can download it and use it and keep it.
All you have is digital ownership.
There are many more advantages and disadvantages... but this is where the story ends.
NFTs can be images, art, videos... anything really.
While crypto trading requires sense, intuition and a very strong heart (it is not for the weak), NFTs are much more versatile and open to participation by lots of more people.
So are NFTs the future?
We can't actually say...
But now that the world is getting digitalized, I guess it's fair to say we'll see a lot more of these digital ventures pop up.
I mean people are already buying digital land... but that's a story for another day.
Thank you for reading.
Stay buzzing,
Maximus✍🏾
Maximus himself..🙌
Really, I now understand what those NFTs definition I have just been dishing around without knowing how it works...
Glad to help my man🙌🏻🙌🏻
And who knows,
We might soon see a temibot exclusive NFT collection.
Make sure to save a spot on the club for me😏
Alright, I will when that time comes..😁
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