Part 1: What are NFTs?
Hello fellow confused millennials, you might have heard of Non-fungible Tokens (commonly known as NFTs) with all the artwork involving apes, cats and doges. You’ve heard of multi-million deals involving virtual rocks, so what exactly is it?
Well, simply put, an NFT is a piece of data that is stored on a blockchain network (Johnny explains it pretty well here). This can be in a form of artwork, music, tweets and even legal documents. But mostly, it has been digital art, and it’s on a craze right now.
There are mainly two blockchain networks that NFTs are predominately in, Ethereum and Solana (both cryptocurrencies). You can view Ethereum as the OG, the grandfather of NFTs and Solana as the young and upcoming star. They both have distinct features that exist only on their network but that’s something to be covered in a future article.
Many will ask: “Why are people paying so much money for digital art when I can just right click and save it?”
Well… You can do that but it doesn’t belong to you, and thus has no value. Basically, since the NFTs are stored on the blockchain network, it can be verified to be the ‘original’ copy and pictures you saved would just come up as a fake and nobody would buy that.
Usually, NFTs are released as a collection of a limited number (say 5000) and all items created in that collection would be verified with NFT marketplaces. There are systems in placed on NFT Marketplaces that protects users from fake copies thus eliminating most of the uncertainty of buying a fake copy.
This actually solves a real world issue in the art world, stolen/forged art. How many times did you have to put a watermark over your pictures and videos so people can’t just repost them as their own? NFTs basically does this, but in the backend, and thus not ruining the visual of the art.
So you wanna see some examples of NFTs to understand what on earth I’m talking about right? Here, take these Turtles that exist on the Solana network for example.
So basically this collection is made of 3,333 turtles that are algorithmically generated on the Solana blockchain. These turtles come with different attributes, some with hats, some of different colours , some with different backgrounds. And because of this, some are worth more than others!
So how does the project determine which turtle you get when you purchase your turtle? Rarity charts. Some attributes are rarer than others and by having many rare attributes, you get a rare turtle. There are websites created to check the rarity of NFTs of different projects, for example HowRare.is.
When you purchase a NFT, you get the full rights over your piece of art and also other benefits depending on the project! Some projects admits you to their exclusive club as owners of their NFT (which can be really cool, some even have host real life events). Being part of the community of the project is a huge part of owning their NFT, you get to bond and network with like-minded individuals and creates a close-knitted circle. Most projects have their own roadmap which informs the public on their plans for the future.
For example, Turtles, as part as their roadmap, donated 10% of their revenue to saving baby turtles. That’s also one of the reasons why I love the NFT community, most of them donates much needed funds to non-profit organisations and also pays it forward to other communities.
Well, that was a lot of information to digest. So, this will be it for the first part of this series: What are NFTs? Hopefully this article broadens your perspective on NFTs to more than just ‘Right-Click, Save As’. Make sure to follow my Medium page for the next part of the series. Feel free to connect with me on Twitter and let me know if you have any feedback/suggestions for future articles.
Till then, the world is your oyster.
