If you try and explain NFTs to a relative (after reading this article), they are going to look at you and ask if you have been smoking something you shouldn’t have.
The conversation will go something like this…
“Crypto-art? On the what-chain?”
“Didn’t you use my credit card to buy something called ripple or something a few years back”
“Is this another scam?”
“When are you going to get a real job?”
To the uninitiated, they are a little hard to grasp. But that being said, if Logan Paul can understand it, so can you. And yes, he is making money off NFTs, of course, he is…
What are NFTs (beginners guide) –
NFTs are non-fungible tokens. The worst possible name and that takes some doing in cryptocurrency.
Think of it this way. There are only one of these tokens. They are unique. Their uniqueness is then created into a digital asset (the token) and this NFT can then be stored and exchanged on the blockchain.
Bitcoin, on the other hand, is fungible. There are plenty of Bitcoin. They can be traded for equal value. I can send you $100 Bitcoin and you can send me an equal amount of Bitcoin.
NFTs are like me drawing on a piece of paper and sending it to you and you drawing on a piece of paper and sending me it. They are strictly unique. They have independent value and it is whatever the other person is willing to pay for it.
NFTs like a lot of tokens were originally built on Ethereum. The first ERC token standard was ERC-721 this token standard later was superseded by ERC-1155, although the ERC-721 is still used and has useful properties.
As ERC-721 and ERC-1155 tokens use the Ethereum network there were a few hiccups along the way when NFTs started to become popular.
Digital Art NFTs
Their uniqueness has led them to flourish in the digital art world. If a digital artist like Beeple creates a piece of art, he can then tokenise it and secure it on the blockchain.
CRYPTOPUNK #4156 (APE) pic.twitter.com/hV37cyqMyb
— beeple (@beeple) March 4, 2021
This then digitally verifies that the art you are seeing is the original Beeple piece. Because after all, you could always screenshot it…
If you are scratching your head at this part just think of all the fake Banksy artwork you see around your local market or abroad.
It is effectively worthless compared to the OG. Why? Because it is… I didn’t invent art, this is just how it goes.
People like knowing the art they own was created by the rightful owner. This is now becoming increasingly true in the digital art world.
Quite rightly so. Digital art creators can make some amazing pieces that I can only scratch my head at, only for it to be posted online and stolen a billion times by everyone who comes across it, all the while they aren’t being paid for their work.
With NFTs that can still happen yes, but it is not just art where NFTs can be useful.
Online gaming NFTs
Cryptokitties (ERC-721) burst on to the Ethereum blockchain with such high demand the trading of these digital cartoon cats congested the Ethereum blockchain so badly, that the Ethereum miners had to reset the gas-price (cost for a transaction) driving the ETH fees through the roof.
I know, all for cartoon cats… Welcome to crypto.
Strap in, it gets weird extremely quickly. Breeding virtual cats on the internet for crypto is all I am going to say.
ERC-1155 NFTs have their scalability benefits with functions like being able to send multiple ERC-1155 tokens in one block allowing a reduction in congestion on the Ethereum blockchain.
They also have semi-fungible abilities too but let’s not go down that road.
The owner of one of these specific NFTs either ERC-721 or ERC-1155 gives complete and undeniable ownership over that token.
They also have cool properties which can allow them to interact with smart contracts so that if a digital art creator sells the piece and it is then further sold on a secondary market at a premium price, the content creator will get a cut of that. It stops people from wanting to buy and sell on with a markup.
Mark Cuban, Lindsay Lohan and Linkin Park have all created and sold NFTs. It sounds like the beginning of a terrible joke, but it is actually true. The hype-train is definitely leaving the station.
For me, the king of NFTs is Beeple. This guy embarked on a 5000-day creation binge, creating one piece of digital art every day for 5000 days. A lot of this was during the pre-NFT era, but if you have been doing something for that long you are bound to catch a trend at the “right time”.
— beeple (@beeple) January 8, 2021
This genius just last week sold his a piece for $6.6 million! The work was sold on the Winklevoss twins NFT platform, Nifty gateway.
One of the most incredible and mind-blowing things I have ever hear surrounded Beeples work.
He released a series of 20 “Everyday’s”, these were 20 individual pieces of digital art from his everyday creations.
These 20 pieces sold for a combined total of $2.2 million. All 20 were bought by the same person using different names and wallets…
The person wasn’t being stingy and wanted them all for themself. What they are doing with them is utterly utterly mindblowing.
These NFTs will be stored in a digital museum on Decentraland. Yup, try and get your head around that one…
Decentraland, to fill you in, is a digital online world where people can own areas of that “LAND” these plots of land in the online world are also NFTs.
Well, this buyer did just that, built 3 museums and stored the newly bought Beeple work there for everyone on Decentraland to visit.
He then tokenised the museums and all the artwork within it into a new ERC-20 token (B.20), these can then be traded and everyone can own a small piece of all the art-work and the land that holds them. Fascinating if you ask me and also a little insane.
The B.20 Metapalooza is the largest Metaverse event to date. We’d take credit, but when over 2,500 people show up, and over 500 get #B20s, it means we got upstaged by the Metaverse. We love you and we promise to build bolder, bigger, better, for you.https://t.co/KlZF9UQZ0d
— Metapurse.eth (@metapurse) January 29, 2021
Cryptopunks and now Binance Punks (Bunks) are equally ridiculous. They are pixelated artworks of 10,000 different punks. These are all individual NFTs and have unique properties that drive the demand up for specific ones.
For example, there are only 4 alien punks in Cryptopunks and consequently Bunks. The rarity of these, like rare pokemon cards, drives up the price to silly numbers.
If you are wondering what the difference is, Cryptopunks original and built on Ethereum. Bunks, copy and paste job on the Binance Smart Chain.
— binancepunks (@binancepunks) March 3, 2021
Are NFTs a bubble?
Erm… probably. But, you could also argue so is traditional art and this is just another way to buy and sell it.
Crypto, as a whole was seen as a bubble too remember…
I don’t think it is going away any time soon and there are actual use cases other than selling JPEGS online for multiple ETH.
My initial reaction was this could be used for gig/concert tickets or even for match day tickets for a sports event. Each ticket is unique and if the NFT ticket is sold on the band/football club or whatever get a cut of the scalping fee. I think it is a win-win.
Before you go try to set-up a Squarespace website selling NFTtickets, it is already being done. Trust me I have looked.
King of Leon will be releasing the first NFT album, which is probably the most exciting thing they have done since “Youth and Young Manhood”…
Sticking with music for a second Jack Dorsey’s Square has just purchased the majority share in JAY-Z’s TIDAL. If I was a betting man, I would be the house on TIDAL becoming an NFT streaming service for artists.
Square is acquiring a majority ownership stake in TIDAL through a new joint venture, with the original artists becoming the second largest group of shareholders, and JAY-Z joining the Square board. Why would a music streaming company and a financial services company join forces?!
— jack (@jack) March 4, 2021
Identification – NFTs being unique could be used for some form of government issues passport that you unquestionably own. Gone would be the days of erasing identifications if you didn’t pay your electricity bill or if you didn’t fulfil your Mi5 duties.
Anything that can draw value from uniqueness and requires some form of storage or security could effectively be an NFT. I believe when ETH sorts itself out and gas fees are reduced, NFTs will blossom.
But until then, the NFT craze will be exclusive to the rich whale’s that can afford huge gas fees to operate on Ethereum. Or more than likely Binance will just hard-fork everything on to the Binance Smart Chain and do it at a lower cost…
I hope your head hasn’t exploded too much.
Next article will be how to create your own NFT… Notifications on!
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