Introduction

As the world is progressing rapidly, new technologies are emerging in the market and we are listening to and reading the news on new technology daily. Every year a new trend pops up from nowhere and then disappears and will get replaced with another.

This time, we got NFTs. The trend of NFTs started a couple of years ago and started booming seriously.

NFTs seem to be a new concept but aren't. Think about skins or any virtual things you purchase in games, that's an NFT. These things used to happen in just games, but now it's going to open for everything, not just for games.

What is an NFT?

NFT or Non-fungible token is a unique and irreplaceable digital asset that is stored in blockchain technology as a form of digital ledger.

NFTs can be consists of digital files such as images, gifs, videos and audio or they can be personas or custom skins in games. By owning an NFT, one can take ownership of any specific digital item.

Let's break this down...

NFT: Non-fungible and tokens

Non-fungible is simply something that is rare and can't be common, or which can't be replaceable.

Simply replace the word "fungible" with "replaceable", so now non-fungible means "non-replaceable".

"Tokenizing" these substantial assets makes buying, selling, and trading more efficient while diminishing the possibilities of scams.

Hence, something which can't be produced or replicated or replaced and is unique in itself in a digital world is known as an NFT.

Understanding NFTs

NFTs prove ownership of a unique digital asset like art, music, collectables, gifs or even memes with blockchain technology.

NFT stands for non-fungible token. That sounds like an intimidating technical term. But NFTs are just digital certificates of authenticity.

For instance, if you buy a book from the bookstore, then it's not unique as there are several exact copies of that book available in the market. However, if you just write something in it or scribble the words, then it will be non-fungible as it's unique from other copies.

If you buy a physical painting, you know it’s real because you see the artist’s signature on the canvas. Somebody can photocopy the painting, but they don’t own it — you do. Before NFTs, digital assets were like photocopies.

In social media, you can see who posted something, but you can’t see who owns an Instagram post, Pinterest Pin or Reddit meme.

NFTs are like a signature for digital items: They affirm ownership of digital assets like art, collectables, music, videos, in-game assets, and more. Just like physical certificates, they indicate who created it, when it was created, who bought it (and when), the price(s) it sold for, and who owns it now.

(Technically, NFTs can contain any data the creator wants to include, but the above are most relevant.)

All of this is public via a blockchain, so anyone can trace each of your NFTs from the original creator all the way to your wallet—and verify its authenticity.

What is a blockchain?

A blockchain is a network of computers that track transactions in their network and generate a giant ledger of who owns what (and how much of it).

Blockchains that host NFTs include: Flow, Tezos, Polygon, Ethereum, Solana and many more...

Some NFTs unlock digital (or physical) experiences, grant access to exclusive communities, let you contribute to projects, grant premium access to software products…

Why do we need it?

Some NFTs are sold for millions of dollars. Whether it's an image or even a tweet. So, Why pay large sums of money to own memes, tweets, and pictures when you can just download them? How can you spend such a sum on something that doesn’t even have a physical embodiment?

Foundation platform names at least five reasons to buy NFT:

1. Participation in the establishment of a new cultural paradigm. NFT democratizes the digital art market as much as possible and gives way to experimenters and innovators.

2. An opportunity to invest in an increasingly popular asset. The scarcity aspect makes NFT an attractive asset, as collector Priyanka Desai points out.

3. With the help of these tokens, a person is able to get something beautiful, unique and special — a piece of the Internet that belongs only to them.

4. NFTs allow you to directly support a particular creative community. For example, there are collectors supporting the crypto art of black artists.

5. With the help of NFT, anyone can become a collector. You can even build your personal digital gallery with platforms like SomniumSpace and Cryptovoxels. 

Buying an NFT

Which ones are the best to buy?

1. B.A.Y.C

   This is arguably the most traded and talked about NFT in the digital world. People like Mark Cuban, The Chainsmokers, DJ Khaled, Snoop Dogg, Jimmy Fallon and many other celebrities have bought one of the bored apes' NFTs.

   Bored Ape Yacht Club or B.A.Y.C has also appeared in the rolling stone magazine, and the team who created the B.A.Y.C, partnered up with Adidas to make (more) hyped NFTs.

Gargamel and Gordon Goner are the creators of Bored Ape Yacht Club or B.A.Y.C, they thought that something is missing in the meme investing community, then they came up with these bored apes.

There are only 10,000 bored apes in existence and they'll never be more and they're based on the Ethereum blockchain.

The cheapest Bored Ape you can buy right now is 52 ETH which is worth roughly around $200,000, but it can get expensive up to millions of dollars.

For example, the BAYC #8817 has sold for 819 ETH ($3.4 million)

How are they so expensive

These NFTs are expensive due to the following reasons:

Each ape has different characteristics which give them unique looks and rarity.

For example, the Ape can be different from another by the clothes they have, the background colour, the eyes they have, the hat they're wearing, the mouth, the fur they have and so on...

People who own these Apes come together in places like New York, California, Hongkong, and the UK, where they held an actual party on a yacht featuring celebrities like Chris Rock, Aziz Ansari, Beck, The Strokes, Questlove, and Lil Baby.

Watch: APEFEST 2021 - NFT NYC - BAYC - this was Bored Ape Yacht Club's first Ape fest in New York City.

The feeling of wanting to belong to some special exclusive social club is real because we, human beings always wanted to belong to something that is special, exclusive, and bigger than ourselves.

2. VeVe

   This is something similar to physical collectables for kids but in a digital NFT. We used to collect physical collectables when we were kids, so similarly this is the same thing you can do but digitally, not physically in the form of NFTs.

VeVe platform allows you to buy and trade their NFTs on their mobile app itself. The interesting thing about this platform is they have bought the licences of different brands like Marvel, Disney, Cartoon Network, Pixar and so many other big brands that we can able to collect and turn into premium digital collectables.

Unlike BAYC, NFTs in the VeVe platform are much more affordable which start from $6.99

3. CryptoPunks

   This is not the first NFT project that people worked on but it is the first NFT project to be popular in the NFT world. It inspired the whole NFT movement at the beginning and got every NFT enthusiast's attention during its early stage.

It was originally inspired by the 1970s Punk scene in London which portrays them as troublemakers, the Punks. This 24x24 pixels blocky image of a character is only 10,000 in number.

When these NFTs were created, these were given out for free in the beginning.

One of them who bought one crypto punks NFT for 8 Ethereum i.e roughly around $2000 in 2017, resold at 4200 ETH i.e. $7.58M.

Read more: Details for Punk #3100

Creating and selling an NFT

check out this post

The downsides of NFTs

1. It can disappear: Even though NFTs appear from nowhere, they can also disappear.

Even though we have full control of the digital asset, as it lines on the blockchain. It is hosted on a website, which means if that suddenly disappears for some reason like if the server goes down or the owner wanted to stop hosting, etc... Then technically, our NFTs would also disappear and all we are left with is a string of numbers and letters (404 error).

2. It doesn't exist in a fair market: like how do we know how valuable an NFT is?

The way we can guess the price might be based on people buying and selling it (through sales history).

Anyone can create an NFT for $0 and then list it on the marketplace for example $1000 or 0.25 ETH.

Initially, no one buys it as no one knows what it is.

As a creator, I can create a separate wallet and fund that wallet ($1000/0.25eth) and I can buy my own NFT. So this establishes a sales history.

Inflated market: step1- list it, step2: buy it

So, only this might not convince anyone to buy your NFT. Interestingly, I can repeat that process an infinite amount of times. So, I can create as many wallets as I want and continuously buy back from myself and all I really do is shuffle my money around but in reality, I'm not doing anything except paying a bit of a fee.

So, this creates a precedent of sales and helps people to buy our NFT. So the people might think that the other people are buying and selling this stuff. So, that person becomes gullible and buys an NFT thinking that they're buying something valuable when it is worth nothing in reality.

So stay safe and use your common sense.

Final Notes

98% of NFTs will be worthless in the coming few years and only 2% will be going to make people a lot of money.

Note: The NFT projects that are mentioned in this post are just for information purpose, so don't invest in something that you've no prior knowledge regarding NFTs. This post is not financial advice, it's just to give information on what's happening in the crazy world of NFTs.