Learn all you should know about NFTs

It looks as if there’s confusion right about now, I mean real time confusion, we’re still trying to understand all the lines and dots of crypto and boom we’re hit by another totally different thing, and what do they call this? “The NFT” the NF…what?. With many people turned millionaire over night, it becomes relevant that we bring to the light that which is hidden in the dusk, come on, what in the world is this NFT, from where did it just cruise into the scene and gain profound ground, is it not same as the crypto, who and who has cashed out fortunes from NFT, what are the opportunities, are there risks, if there are, then should you venture into it?. 

Right before we jump into the whole lot of data surrounding NFT, let’s try to do justice to the simplest part of the questions; What is NFT?

N for Non, 

F for Fungible,

 T for token 

So NFT stands for “non-fungible token”. 

No, we won’t define the term “non fungible” until we make clear the concept of “fungibility” yeah never mind, the word fungibility is not in your dictionary. Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Money is a prime example of something fungible, where a very neat newly printed $1 bill can easily be exchanged with another old and rusty $1 bill, nothing unique, each can be used to purchase any of the commodities in a dollar shop. Assuming I lend you a $100, seriously I don’t plan on lending you any money, but let’s assume I decide to lend you that amount. Because of the fungiblity nature of money, it doesn’t matter if you choose to pay me back with a $100 note as both can substituted or you decide to give me two $50 notes, I can still take a $50, two $20 and one $10. Reason being that fiat currencies are said to be fungible. So you can just take the word “fungible” and substitute it with “replaceable”

Now we’ve nailed fungibility let’s now go to the very unique characteristics of NFT which is “non-fungibility”. Non fungible items can’t be interchanged because each bears unique characteristics and doesn’t have same worth as a similar token. let’s say you have an NFT work of art; a monkey, that monkey will not be valued same as another look alike monkey. The first monkey might be priced at $2000 while no one will even think of downloading the second as a free jpeg image for a screensaver. Come on who uses a monkey as screensaver by the way?

If we should basically define NFT we would say it is a digital asset linking ownership to a unique physical or digital item which include but not limited to music, videos, and arts.

 

It is widely believed that the history of NFTs can be dated to 2017, when American studio Larva Labs developed CryptoPunks, a series of collectable digital characters traded through NFTs, which serve as a good starting point in getting your head around the technology.

There are 10,000 unique CryptoPunks to collect. But being digital commodities, the ability to make copies which could be traded freely – thus reducing their value – is easy.

So, CryptoPunks were made digitally scarce through the use of blockchain, a kind of ‘Cloud’ technology for financial assets that keeps track of file ownership through advanced security protocols.

This gives a proof of ownership to each Punks’ holder, meaning there will only ever be one true copy of each of the 10,000 digital characters in the world.

So that one true copy becomes the real NFT which is verifiable by the blockchain technology. Same way art lovers go to the art shop and pay huge sum of money for an antique art collection we can likewise say that NFTs are digital or modern day collectibles.

 

It’s critical we should really talk about some ridiculous things sold on NFT and their prices;

 This is the fun part of it all because I still remember my mum lamenting on the huge sum of money footballers are being paid, if she comes to know about the transaction values of these NFTs, she will definitely give up on the universe.

1. I’ll start with twitter. You know how many tweets you’ve made on twitter, well most times nobody reads your tweet, you end up liking and commenting on your tweets; that can be so boring but the first tweet ever twitted (wow I just found out that “twitted is in my dictionary) on twitter was by CEO Jack Dorsey and it was sold for $2,915,835.47. I get it, you have issues with naming figures so let me gladly help you with this one, I mean whomsoever bought it paid a whooping sum of two million nine hundred and fifteen thousand eight hundred and thirty five dollars and 47 cents. I’m really crying typing this amount right now. Wait, maybe he twitted something so unique, creative and special, wrong!! The tweet says “just setting up my twttr” Oh no, even the spelling of “twitter” was wrong but someone saw it valuable to spend his millions. I don’t know about you, but to me it seemed ridiculous.

2. A twenty seconds slam dunk video of LeBron James “Cosmic Dunk #29” was sold for $208,000 that’s two hundred and eight thousand dollars. Seriously, you know I’m a diehard Lebron James fan “Go Lebron!” come on I can’t even pay that much to go and see him, on a serious note I don’t even have that much right now, but some dude spent a fortune to lay hold on the clip just for twenty seconds. Let me ask you,” What kind of thing would you pay that much to see for less than a minute?” Even if it’s real life angel falling from the sky somewhere in Northern Africa I can’t pay more than $20 tax free by the way.

3. Save thousands of life, a really not fine NFT art work created by Noora Health, an organization that saves lives at-risk patient in South Asia was sold for $4.5 million. I really need to show you the art work but you can check it out online, I won’t even look at it for free, you have to pay me to hand such an art work to me.

4. Beeple, crossroad: Even the haters of former president of USA Donald Trump also had their pay day when Mike WInkelmann’s Crossroad Animated NFT showing the billionaire Donald Trump laying on the field while being ignored by passers-by was sold for $6.6 million. I really love Donald Trump and he’s my hero that explains how irritated I am now, knowing that someone paid such amount for that 

5. A digital artwork made by anonymous artist known as Pak happened to be the most fascinating of the NFTs. Don’t misunderstand me, by fascinating, I mean the price for which it was sold and not the looks, I promise you there’s nothing fascinating about its looks. It was sold for $91.8 million making it the most pricy NFT till date.

Once human beings are rich enough to satisfy the basic needs of life, that is food, shelter clothing, they seek for other ways to achieve happiness and most of them find it in investing in works of art, it is more of a psychological thing so the idea of these NFTs bought at enormous prices has to with their rarity, it is their uniqueness that attaches a value to them and not necessarily their looks or much creativity.

  Most people have tried to confuse cryotocurrencies with NFT, though they have their similarities but they are way different. 

Similarities being that both NFT and cryptocurerncies make use of same blockchain technology, moreover NFT market place makes use of cryptocurrencies for purchases mainly the Ethereum network 

BUT

The difference between them still lies in the words “fungibility and non-fungibility” Cryptocurrency is a currency. Like every other currency, it has only economic value and is fungible. That means that, within a particular cryptocurrency, it doesn’t matter which crypto token you have; it has the same value as the next one, 1 $ETH = 1 $ETH. But NFTs are non-fungible, and they have a value that goes way beyond basic economics.

 

What can be NFT and how can you create it?

I believe we have mentioned the things that can be minted as NFTs, such things as artworks, videos, audios, poetry, paintings, images and so on. The real question is; how can these things be placed in the online market to fetch such prizes?

1. Make ready your digital file: remember digital file has to do with the digital form of those items listed above, but if the NFT is in physical form then it has to go through the process of digitalization by scanning.

2. Crypto wallet: You will need a crypto wallet that has compatibility with Ethereum block chain reason being that most NFTs are created on Eth Block chain. There are quite many of them but since this is not a financial assistance organization we are not recommending any.

3. Wallet funding: Transaction on Ethereum block chain using your wallet is not for free which you should have guessed so your wallet should be funded with Ethereum which covers the gas fee for minting and listing.

5. Connect your wallet to a digital market place: one of which is OpenSea (Note we’re are not recommending digital marketplace) 

6. Using the create button you can upload your digital file and give the necessary description and also pay the gas fee incurred in the process.

 

Most people buy these NFTs with mindset that in the nearest future, the price will escalate and they would sell them off, well I’ll be sincere with you some of the NFTs bought for thousand dollars years ago are now valued at millions of dollars. Owing to this most people tend to enquire my opinion in venturing into purchasing NFTs. I’ve tried to avoid such questions but here is what I consider as my humble opinion which I’d rather you don’t take as a financial advice of any kind.

NFTs are not assets, people tend to erroneously consider it as asset class. if you buy an asset say an estate, you have documentations that prove that you are the owner of the estate and can do anything you want with it any time given, here is the tricky part, that you have an NFT of an artwork doesn’t give you access to the artwork, what you have is just a digital proof of ownership while the real article still stays with the content creator. It’s funny right? but that’s just it. Secondly there are no guarantees that the price of NFT bought will increase with time, in the nearest future that piece of digital art considered to be a piece of digital fortune might be something useless. The hyping and the get quick syndrome attached to NFT and its headline is gradually drawing fraudsters like vulture to corpses hence one desiring to invest in NFTs should be extremely cautious. Some of them try to sell ordinary valueless stuffs claiming that they’re NFTs but they are regular jpeg images downloaded on the internet with less than four kilobytes. Some other group of scammers lay claim on certain NFT that they have the appellant right to sell them posing that they are the creators while they are not  

Other people may be able to make copies of the image, video, or digital item that you own when you buy an NFT. But, similar to buying a unique piece of art or limited-series print, the original could be more valuable.

The bottom line is that it is risky more like feasting on a table with monster but common that doesn’t mean that the dish might not be sweet. NFT is risky, life is risky and that is the fun of it all so just calculate the amount of risk you’re willing to take, count the cost and then make your decisions.

 

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