Just as I scrolled through Twitter yesterday, I saw a tweet by Asemota. Someone already bought his domain on Opensea and it costs 1 etherum🙄. I just bought a domain on Hostinger and heaven knows it barely cost me $1.
The past few months have seen a lot of trends but most especially, we've seen a lot from the world of crypto, blockchain, and technology. People have moved from not knowing what crypto is about to own Binance wallets and owning at least $10 worth of XRP, DOGE, or ADA. And just when we thought we've seen it all, Jack of Twitter puts up an autographed tweet as NFT and the bid was insane. He sold his first tweet for an insane $2.9 million😮.
I didn't know jack about NFT's about 16 hours ago, but after digging around I think I know a little, enough to share, and yeah, this article may be NFT-ed soon. So, read it for free while you still can.😉
In this article, you will learn what NFT's are and why every geek, nerd, or tech person can't stop tweeting about it.
What is NFT?
NFT is an acronym for 'Non-Fungible Token'. A Non-fungible token simply means that the token is unique and can't be replaced with something else.
Wikipedia explains NFT's as
a unit of data stored on a digital ledger called a blockchain that certifies a digital asset to be unique and therefore not interchangeable.
Technically, NFT's are smart contracts that live on a blockchain. The contract stores the unique properties of an item and keeps track of current and previous owners of the digital asset. NFT creates a blockchain-based digital certificate for your digital collectibles. This certificate gives your artwork a unique ID.
NFT's are built using the same underlying software used in building Bitcoin, Etherum, etc like the blockchain, Ethash, Scrypt. This is hosted on a distributed blockchain ledger that records all transactions. NFT is minted or created from digital items that represent intangible and tangible things.
Ok, it gets more interesting, NFT's can be programmed to allow the original owner to earn royalties anytime the digital asset exchanges hands. So, this means that aside from selling off an original piece, you can earn some percent from every transaction that happens to the asset. It's just like building your car, selling it off to MR A. You make a profit from selling to Mr. A but when Mr. A decides to sell it to Mr. C, you still get a percentage.
Enough with the jargon, let's speak in a language you can understand...😎
Understanding NFT's Like I'm 5😉
To better understand what NFT means, you need to understand what 'Non-fungible' means. Non-fungible means 'unique and can't be replaced with something else. For instance, a $100 note is fungible because it can be split into 5 places as $20 notes, into 2 places as $50 notes, or into 100 as $1 notes.
On the other hand, the Mona Lisa painting by Leonardo da Vinci can never be split into parts, it can be copied but will never be the authentic copy. The original painting is valued at $867 million dollars as of 2021.
In a layman's language, NFT's are digital assets that increase and decrease in value. NFT's can be used to sell a piece of Art, domain names, concert tickets, and basically, anything that is unique, needs proof of ownership and can be sold or traded. Supply and Demand make NFT's valuable.
NFT is just a fancy way to describe using a unique signature to hold a digital piece of data on the blockchain. The NFT holds:
- The name of the owner and the buyer.
- Unique Fingerprint(Hash)
- Token Name and Symbol.
- Link to file on IPFS (Interplanetary File Storage).
Why pay so much money for something anyone can copy or even print?
Uhhhhhhhhmmmmmmmmmm, I could ask you the same questions about Crypto but we are not ready to have that conversation, are you?🤔
The worth of an NFT is determined by what people are willing to pay for it. Prices are simply driven by demand. And of course, this can be influenced by the owner.
For example, imagine the most popular painter in the world decides to put up a piece of art as NFT. You cannot exactly compare that to a random piece of art done by me (as much as that hurts me to say it😪). So, if Jack sold his first tweet for $2.9 million, it doesn't mean mine will sell for the same price and it could also mean that it may not sell at all, as sad as that sounds.
This seems interesting, can I start collecting my own NFT's?
If you decide to start building your own collection of NFT's, then you will need a digital wallet that can hold cryptocurrencies. The majority of NFT's are bought using Etherum, but the currency is determined by what your seller asks for. You need to do some more research and visit some of the most popular marketplaces for NFTs like:
So, you mean to say that the value of an NFT is dependent on people?
Yes, you got this right. People determine the value of NFT's just like Diamond, Coal, Gold, Bitcoin, and even Money. It's all dependent on humans.
The same humans that can get bored one day and not want to mint NFT's anymore? Yes, the same humans.
I wanna cry so badly, this is weird
Oh! yes please, we can cry together while we listen to a sad playlist.😣
In summary, NFT's are
- Easily transferable, and
- hosted on the Etherum blockchain. Although, other blockchains support them as well.
Please do well to share any questions or contributions. As I learn more, this page will get updated. Drop a comment or send an email to email@example.com.
Thanks for reading!