NFT’s Explained: Everything You Need to Know
This cultural phenomenon has taken the world by storm and many of us are still just as confused as you are. Being around since 2014, but making their way into mainstream media in 2021, NFTs have become all the buzz in the business world! From being involved in million-dollar auctions or having affiliations with A-list celebrities, the NFT has caught the public’s attention.
Bold x Collective often gets clients and prospects asking them about NFTs and what exactly they are, as well as how they can potentially use them for their brand. This blog gives a full breakdown of what you need to know about NFTs.
What Is an NFT?
The acronym itself stands for Non-fungible Token. What this means is that it is a digital asset that is unique and cannot be replaced by something else. It can be traded amongst other NFTs, but you would have something completely different.
The NFT itself is the digital record on a blockchain (digitally distributed public ledger) that stores the information associated with that file such as who created it, who linked it to the blockchain and who has bought/owned it.
Is an NFT like Cryptocurrency?
Similarly, NFTs are built using the same programming as cryptocurrencies such as Bitcoin and Ethereum. NFT however, are non-fungible. Every NFT has its own unique signature, therefore it is impossible to have it exchanged or for them to be equal in value.
That’s what makes them different. With Cryptocurrency, the value is equivalent among all and can be traded and exchanged for another seamlessly which is why it is such a trusted means of transactional trading on blockchains.
What Can Be an NFT?
Well, an NFT can really be anything digital. Some examples would be drawings, music, video games, digital art, and more.
These are then able to be sold on marketplaces across the web; a notable example would be the marketplace “OpenSea” which is now valued at over 13 billion dollars. Adidas has minted some with Bored Ape Yacht Club and a collaborative NFT project with Prada; even Mcdonald’s and Twitter have included NFTs in their marketing mix on this platform.
So, it’s clear that a lot of money is being invested in these files!
What Are NFTS Used For?
NFTs and blockchain ledgers give content creators and artists an opportunity to monetize their projects without the physical resources needed to do that in the real world. For example, artists don’t have to rely on gallery shows or live auctions to be able to sell their art.
This way, artists can sell directly to their consumers and program in royalties so that whenever their art is sold to a new owner, the creator will receive a percentage of the sale thus creating a consistent stream of revenue for these artists who typically don’t get this kind of option with physical art.
So, from an artist’s perspective, NFTs may be the future of the industry and something worthwhile.
Where Can I Buy NFTS?
To preface, it is important that you set up a digital wallet where all NFTs and cryptocurrencies can be stored. Crypto can be bought using platforms like PayPal or Coinbase. Once you’ve acquired your digital wallet and are ready to go, you can then head into the marketplaces.
The current largest NFT marketplaces are as follows:
- OpenSea.io; Refers to itself as the “amazon of NFTs”, this marketplace has a large and wide variety of different types of NFTs consumers may want to investigate.
- Rarible; This marketplace, like OpenSea, allows artists to create and sell their own NFTs. There is also the feature of RARI tokens that allows holders to contribute to features like fees or community guidelines.
- Foundation; On this platform, artists must receive “upvotes” or an invitation from other creators to be able to post their art. This platform would be best for artists looking to capitalize on their projects in an exclusive manner
Where Does the Value Lie in an NFT?
You may be wondering how any person would justify spending so much money on a digital file that can ultimately be copied and distributed for free. I think the best way to explain it would be in terms of artwork.
Many people could have a print of Van Gogh’s starry night, but there is only one original painting. Sure, you could argue that copies of digital files are just the same in terms of quality; however, it is more about the ownership of the original file.
Should I Get Into NFTS?
It really depends on if you are a creative artist selling your work as NFTs or if you are a buyer/collector of NFTs. If you are an artist, selling your work as an NFT may be a good decision for you as it is a way for you to gain access to a market that in the real world may not have much of a market.
Along with this, as a creative, if the NFT grows in popularity and value, you will be financially compensated accordingly.
On the other hand, there are buyers and collectors of NFTs who purchase to support artists of their choosing as well as the perks of having some ownership rights like being able to post the NFT yourself or set it as a display picture. This is where most people start to see controversy about whether NFT’s are legitimately worth investing in or not.
Ultimately, it’s entirely subjective and up to you if you see these digital files as worth it.
So now that you know what an NFT is, are you interested? Are you a buyer or an artist? Do you think NFTs are the future of digital art collecting?
Regardless of where you stand, if you are thinking about purchasing or selling NFTs, make sure to do your research beforehand.
See if it is worth it for you and treat it as you would any other investment/business decision! For more blogs and business-related articles, check out the Bold x Collective blog.