What Exactly Is An NFT And Why Should You Care?
If you are involved in the tech world in any capacity, odds are over the last couple of weeks and months, you have heard the term “NFT” being thrown around. If you are involved or interested in tech: the CEO & Co-Founder of Trufan, Inc., Swish Goswami, thinks it’s important that you understand what this technology is and why it’s so important. Treat this article as an introduction to NFTs — it’s a vast space, and there’s a lot more reading and learning you can do, but my goal with this article is to give you a baseline that you can build off.
What is an NFT?
The 21 year old entrepreneur explains that NFT stands for “nonfungible token,” which, according to Investopedia, are “assets on blockchain with unique identification codes and metadata that distinguish them from each other.” The keyword in that definition is “unique.” What makes NFTs different from cryptocurrencies is the fact they are all different (or nonfungible), whereas cryptocurrencies are fungible or “identical to each other and, therefore, can be used as a medium for commercial transactions.”
An easier way to explain the difference between cryptocurrencies and NFTs is this: Cryptocurrency is a currency, and NFTs are goods. You can buy, sell and resell almost anything in the physical world and NFTs enable you to do that with digital goods. And because they are verifiable, thanks to the blockchain, they can be traced back to their source of ownership, which makes them ready to be commoditized.
Mr. Goswami says that you should look at it this way: an NFT is like a concert ticket. When you buy your ticket and print it out, your name and the date and name of the event are on the ticket. It can all be traced back to you. Your ticket is unique — someone could duplicate your ticket, but it won’t work because your ticket belongs to you and only works for you unless you decide to sell it to someone else, transferring the ticket’s ownership. NFTs work the same way.
Where are NFTs making noise right now?
Let’s take a look at some of the NFTs that have generated the most buzz so far:
• NBA Top Shot: Essentially digital trading cards but instead of photos, you get full video highlights allowing you to own moments in NBA history.
• Twitter’s first tweet: On March 21, 2006, Twitter CEO Jack Dorsey tweeted, “Just setting up my twttr,” and now that moment in internet history has been sold to a collector for over $2.9 million.
• Nyan Cat GIF: Nyan Cat is a famous internet meme, and for its 10th anniversary, the creator of the meme remastered it and put it for auction as a 1 of 1. The 1 of 1 sold for over $600,000.
• Beeple: A digital artist who started producing a new piece of digital every single day 14 years ago sold a collage titled “Everydays: The First 5000 Days,” which combines every single image of his daily creation. This particular NFT was auctioned by Christie’s, a world-famous auction house founded in 1766 and sold for a staggering $69 million.
Where will NFTs have the biggest impact?
Mr. Goswami says that, in its current form, we are seeing NFTs being used in the collectibles space, but strongly believes that where we will see NFTs have their biggest impact is in the world of gaming.
Take Fortnite, for example. It’s one of the biggest video games on the planet yet, it is free to play. Fortnite makes most of its revenue through microtransactions. These microtransactions are for things like “skins,” or costumes, that players are able to purchase. This is big business for Fortnite, which brought in revenue to the tune of $1 billion dollars in only two years through their microtransactions.
What’s interesting about these microtransactions is that they don’t have an impact on a player’s performance or ability in the game — they are based on aesthetics. A study done by Science Direct found that “microtransaction spending was predicted by social influences (i.e., the frequency of spending by the participants’ closest friend who spends money on Fortnite),” meaning that these purchases were essentially a status play for gamers.
Where can you buy NFTs? "Before you even start looking for a place to buy your first NFT, you’ll need to purchase some Ethereum", says Mr. Goswami. You can buy Ethereum on multiple platforms, including places like Coinbase. Once you’ve purchased your cryptocurrency, you can now look at buying an NFT. Where you look will depend on what type of NFT you’d like to buy. Here’s a list of some popular NFT marketplaces for you to check out: • NBA Top Shot: As mentioned above, you can buy and sell moments in NBA history. • Nifty Gateway: Nifty teams up with top artists and brands to create collections of limited edition, high-quality NFTs exclusively available on their platform. • OpenSea: OpenSea is the first and largest marketplace for user-owned digital goods, including NFTs. • SuperRare: SuperRare is still a relatively new platform in early access, onboarding only a small number of hand-picked artists. "These are just a few of the many NFT marketplaces available right now for consumers to check out. I’m expecting more and more to pop up in the coming months as the industry only continues to grow", says Mr. Goswami. As always, please make sure you do your proper due diligence prior to investing any of your money. This article is not investment advice and should be used for educational and entertainment purposes only.