What is an NFT?

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NFTs are everywhere. And everyone is talking about them: influencers, celebrities, and millions of people around the world. The other night, I was watching a late-night show and even the host was talking about them. So, why all of the sudden all this fuss about these three letters?

In this post, we will come to understand what an NFT is and what exactly they are used for. The best part? We’ll also talk about how you can become the proud owner of one (yes, you can buy them)!

What does it mean for something to be fungible?

To understand what an NFT is, we first need to understand what “fungible” means. 

Something is fungible if you can break it down into multiple parts that, altogether, represent the whole thing. 

For example: 

Take a $100 bill. You can split it into five $20 bills and they, together, represent the $100 bill. This is an example of something that is fungible. 

Now let’s look at an example of something that is non-fungible.

Think of your favorite painter and one of their paintings (who doesn’t love a good painting?).

My favorite painting is Salvador Dali’s The Persistence of Memory. This painting, or any painting for that matter, cannot be broken down into multiple pieces. I doubt that MOMA would let you have the painting to break down to begin with, and I also very much doubt anyone would buy them!

The same is true for NFTs!

Now, sticking with our painting example, imagine that Salvador Dali created a digital contract linked to their painting containing:

  • A unique number (hash/fingerprint)
  • A name
  • A symbol
  • Tracking history of who’s created the painting (similar to the tracking number of your courier, but instead of locations where the package has been, it’s a history of who’s owned it in the past)
  • A history of the amount of money that has been paid every time the painting has been sold

Wouldn’t that be cool? Well, that’s exactly what an NFT does!

What is an NFT?

NFT stands for Non-Fungible Token. In other words, an NFT is something that you cannot break down. “But what do I do with that?” you may be thinking. And, “How are they used?” Let’s discuss.

What are NFTs used for?

NFTs are essentially used to transfer ownership of something from one person to another. 

This doesn’t necessarily mean that you will get the actual, physical object, whether it is a painting, a digital image, a piece of art, or any other physical or digital item linked to it. But you could if you wanted to, digitally.

Nevertheless, if you are the original creator of an NFT, you will own the copyright and the reproduction rights. You could even go as far as configuring your NFT so that every time the NFT is sold you get paid for that, too! How cool is that?

How do NFTs work? 

NFTs are like contracts or certificates that live in the blockchain and include all of the details associated with the object, as I explained with our Salvador Dali painting example. 

How do I create my own NFT?

Let’s say you are a digital artist and have a cool piece of artwork that you want to sell. You could create an NFT associated with the artwork, display it on your site with a low-resolution version, and have the NFT point to the high-resolution version of the artwork.

Anyone could have copies of your digital artwork, but you will always be the creator and the owner of the copyright, which means that you can create copies, fridge magnets, souvenirs, and anything else you can think of related to the artwork. As the creator, you retain all of these rights while somebody else will have official ownership of it (assuming you end up selling it).

How do I buy or sell an NFT? 

NFTs exist mostly on the Ethereum blockchain, using the same technology and programming languages as the cryptocurrency. 

NFTs can be purchased from multiple sites. 

Currently, the largest NFT marketplaces are opensea.io , rarible.com, and foundation.app. However, please do note that there are many other options.

I cannot recommend one marketplace in particular, since we are not promoting endorsement of any kind. But my biggest advice for you is to exercise good judgment when choosing the platform from which you want to create or buy your NFT(s). Always look for reviews from a credible source, compare your options, ask colleagues in the industry, and be cautious.

Note: One piece of advice that I find never fails is to create a savings account entirely dedicated to your online transactions, and never use your main savings account or your credit cards for online purchases on sites that you have never used before.

NFTs: In conclusion

I hope this post will inspire you to explore the world of NFTs. Who knows? You may end up being either the proud owner of an expensive NFT or, even better, the creator of a really popular one. Or maybe you’re already the proud owner of NFTs! Then why not share this blog with your friends so that they can jump on the bandwagon? Whatever the case, I hope you enjoyed this blog as much as I enjoyed creating it for you.

 

References

Forbes

Ethereum

Artnews

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Yoav Chanto

Yoav is a delivery manager, product manager, certified product owner, and scrum master with experience in start-ups, enterprise, and non-profit organizations. His product management experience includes e-commerce, banking, healthcare, pharmaceuticals, and satellite imagery across the web and mobile platforms. Over 15 years of strategic, management, and technical experience in software development products, ranging from early-stage startups to Fortune 500 companies. In his free time, he enjoys oil painting, studying the holy scriptures, reading Christian books, learning languages, swimming, and working out.

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