What is NFT ?
So a non-fungible token also known as an nft is a type of digital token or asset a common analogy is to think of these as digital trading cards or digital paintings whenever you buy. An nft you are basically just buying the rights to that specific asset now non-fungible means that it can’t be changed whenever it is created you can’t split it up and it must be distinguishable from something else unlike a bitcoin one bitcoin is the exact same as another bitcoin.
Well with nfts they’re never the same they’re always different and also a token it’s just a small piece of data that you own together an nft is a token that you own that doesn’t change throughout time.
The Details of all Non Fungible Tokens:
But when it comes down to the technicals what exactly is an nft ? Well nfts are actually just a piece of data that is owned by an address and whoever has the password to that address they own that piece of data and this piece of data can be bought and sold to different addresses and that data is verified on a blockchain. And you can actually check the owner history is always trackable with an nft for example this cryptokitty that sold for 600 000 is essentially just a small url that is owned by an address the only thing that that person owns is a tiny piece of data.
Now that piece of data points to a server somewhere that usually hosts an image and technically whoever owns that server could change the image and it’s important to know what you are actually buying when you buy an nft you are buying a piece of data that points to a server that hosts either an image or a gif. You should know that the server could change or that the image and gif could change it’s actually the specific piece of data that you actually own on the blockchain not the access to the server and not the image or the gif. But rather that tiny piece of data that points to the server so in a sense when you buy an nft you’re buying a small piece of data that represents something larger kind of like buying a stock you’re not buying the entire company and unless it’s a dividend stock you’re not actually getting anything.
Why buy an NFT?
Why would you want to buy an nft and there’s many reasons but right now the main reason most people are buying is because they see nfts as collectibles in the investment category. So let’s go over four main things that make an nft valuable number one first so just like bitcoin is so popular because it was the first cryptocurrency. The first nfts of specific creators or businesses will also have value for example pokemon cards are quickly gaining popularity and the most expensive cards are those that were produced in the first edition. So let’s say if you have the first united states nft it will likely have some perceived value. The second thing that makes an nft valuable is its utility which in other words is the real world benefits so imagine if elvis presley was still live and he sold 50 nfts now by owning one of them you could have lifetime access to any of the shows that he participated in. Now these nfts would quickly become popular and very expensive due to their real world benefits personally this is the only reason i would buy an nft is if it had a real world benefit and i think in the future almost all nfts will evolve to have this sort of aspect creators will sell nfts for income and in return have a membership community or do a monthly lunch meeting or something in that fashion.
Okay the third thing that makes an nft valuable is if it’s unique or rare so for example think of the mona lisa anyone can have a copy of the mona lisa in the room but only one person or a museum in this case can hang up the real painting by leonardo da vinci for everyone to view. Now the same goes for the original constitution of the united states or a babe ruth signed baseball they are rare imagine if stephen hawking only minted three nfts they would be very valuable because there’s only three originals even if they’re just pictures of the universe other people could have that picture but they wouldn’t have the original one minted by stephen hawking the last thing that i found that makes an nft valuable is ownership history. So for example what’s your favorite celebrity mine personally is robert downey jr so let’s say he decides to sell his leather jacket and buy a new one well when he first bought that leather jacket maybe he paid two hundred dollars for it but me i might pay 800 just to have the same jacket that robert downey jr wore. Now the same goes for nfts someone might be willing to pay a million dollars of an image of a duck that barack obama owned at one point so keeping these in mind you should think about what actually makes an nft valuable.
If an nft is the first of its kind if it has a real world benefit if it’s rare and if someone important owned it these are questions to ask yourself during valuation of an nft for example does buying jack dorsey’s first tweet for two and a half million dollars fit any of these let’s go down the list is it a first yes it actually is the first nft in that category second does it have utility it does not you don’t get to change the tweet and you don’t get to advertise your business or something like that third is a unique. Yes it is unique lastly what about its ownership history well this is actually a no yes it is jack dorsey’s first tweet but nobody famous has actually owned the specific nft yet to fit this category for example maybe it was my tweet and then pewdiepie owned it then the answer would be yes but in this example it only checks two of the boxes. So if you buy his first tweet you’re basically betting that someone else in the future will want to buy it for a higher price because holding that nft does absolutely nothing for you there is no utility you’re buying it as a novelty or as an investment unless one day jack dorsey says whoever holds that nft he’ll have lunch with once a month then the value would skyrocket so now that we have kind of went over what they are.
Top 11 Most Expensive NFTS:
I’d like to tell you the 11 most valuable nfts now this might get a little rambly number one crypto punk 6965 in february 19 2021 it sold for 800 ethereum.Next we have crypto punk 4156 which sold for 650 ethereum and february 18th 2021.The third we have crypto punk 2890 which sold for 605 ethereum and january 24th 2021.Then we have the famous dragon cryptokitty which sold for 600 ethereum crypto punk 6487 which sold for 550 ethereum. Next up we have some land in the decentraland world around 12 600 square meters it sold for 514 ethereum, next is something called hash mask 9939 which sold for 420 ethereum this really interesting car concept the f1 delta time actually sold for 415 ethereum, another crypto punk sold for 400 ethereum and an actual lot of land in the central land world sold for 345 ethereum and the famous nian cat sold for 300 ethereum on february 19 2021 .
Can someone copy your NFT?
So another important question to ask about nfts is can someone copy your nft, Well technically yes someone can copy an nft just like any other piece of artwork but the original nft address can be traced back to the original creator since all nfts have a log of their transaction history it’s also important to note someone could create a new nft that points to the exact same hosting address that the original nft does or they could point it to a different address that is of the same image or gif the value in an nft is not the image it’s the specific piece of data. Just like i could make a free throw at my local ymca and lebron james could toss one in while 30 000 people are watching even though these are basically the same thing one has way more value based on what other people think of it i may be doing the exact same thing lebron is doing but people value his free throw way more than mine.
How do you buy an NFT?
Another question you might have moving into the nft space is how do you buy an nft ? Because purchasing an nft is actually quite simple and it’s probably the same difficulty as purchasing a stock of a company. Now you should know most nfts are sold on marketplaces kind of like ebay amazon and facebook marketplace but that specialize in nfts one thing that might be a drawback of buying nfts is that they are usually purchased with ethereum so you’ll likely need to own some actual ethereum before you purchase a cryptokitty or an nba top shot buying cryptocurrency and trading it to a wallet that you can buy in nft usually takes some technical skill on transferring crypto. Because if you do it incorrectly you could lose all of your money in the transaction so here are the four most commonly used nft exchanges that allow you to buy and sell nfts app.rarible.com niftygateway.com openc.io and superrare.co.
So whenever you go to buy an nft the first step is to create an account on that specific website step number two is that you’ll either have to buy crypto on another exchange and then transfer it to the wallet on that exchange you should know nft wallets are very similar to any other cryptocurrency wallet they usually have a public and a private key. And for those wanting the technicals most are based on the erc721 protocols but i promised that i would not get too technical in this blog and then lastly you can actually bid like an auction and pay for whatever nft that you’re attempting to buy and if you win that nft will get added to your account and then stored in your wallet.
Where do you store your NFTs ?
Which brings us to the next question where do you store your nft because now that you’ve purchased your nft you’re probably wondering where the heck you store. It well you store it on a wallet you’ll want to make sure that it’s safe and accessible to show your friends and other people what you’ve recently purchased. Now the best way to store your nfts is on a hardware wallet something along the lines of a ledger nano where it can be offline and protected but if you’re wanting to keep it online here are some online applications that host wallets for you metamask.io trustwallet.com
Disclaimer:
This is not financial advice, I am simply talking about my experience with cryptocurrency. If you want to invest in cryptocurrency please do your own research and invest at your own risk. We recommend that as a consumer, you exercise your due diligence and research any and all strategies recommended to you before adopting them in your own business. We and other encompassed entities are not responsible for any damages that result from an effort to implement the information provided in this or any other video, article, social media post, and related publications.