Non Fungible Tokens (NFT's)

Non Fungible Tokens (NFT's)

Like I'm 5

Sep 9, 2021·

5 min read

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Just as I scrolled through Twitter yesterday, I saw a tweet by Asemota. Someone already bought his domain on Opensea, and it costs one etherum🙄. I just purchased a domain name on Hostinger, and heaven knows it barely cost me $1.

asemota tweet.jpeg

The past few months have seen a lot of trends, but most significantly, 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 when we thought we'd seen it all, Jack of Twitter put up an autographed tweet as NFT, and the bid was insane. He sold his first tweet for an insane $2.9 million😮.

jack tweet.jpeg

Just how?!

I didn't know Jack about NFTs about 16 hours ago, but after digging around, I know a little, enough to share, and yeah, this article may be NFT-ed soon. So, please read it for free while you still can.😉

In this article, you will learn about NFTs and why every geek, nerd, or tech person can't stop tweeting about them.

What is NFT?

NFT is an acronym for 'Non-Fungible Token'. A Non-fungible token means the token is unique, and nothing else can replace it.

Wikipedia explains NFTs 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, NFTs 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 collectables. This certificate gives your artwork a unique ID.

The same underlying software employed in building Bitcoin, and Ethereum, is what NFTs make. A distributed blockchain ledger holds the records of all transactions. NFT is minted or created from digital items representing intangible and tangible things.

Ok, it gets more interesting. NFTs 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 make some percent from every transaction to the asset. It's just like building your car and selling it to MR A. You profit from selling to Mr. A, but you still get a percentage when Mr. A decides to sell it to Mr. C.

Enough with the jargon; let's speak in a language you can understand...😎

Understanding NFTs Like I'm Five 😉

To better understand what NFT means, you must 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 five places as $20 notes, into two 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. You can copy the picture, but it will never be authentic. The original image is valued at 867 million dollars as of 2021.

In layman's language, NFTs are digital assets that increase and decrease value. A piece of Art, domain names, concert tickets, and anything unique needs proof of ownership and can be sold or traded as an NFT. Supply and Demand make NFTs valuable.

NFT is 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 still deciding whether to have that conversation, are you?🤔

The worth of an NFT is determined by what people are willing to pay for it. Demand drives Prices in the world of NFT. And, of course, this can be influenced by the owner.

For example, imagine the most famous painter in the world who decides to put up a piece of Art as NFT. You cannot precisely compare that to a random sample of Art I created (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.

All of this seems interesting. Can I start collecting my NFTs?

If you decide to start building your collection of NFTs, then you will need a digital wallet that can hold cryptocurrencies. You can buy NFTs using Ethereum, 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 NFTs just like diamonds, 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 NFTs anymore? Yes, the same humans.

I want to cry so badly; This is weird

Oh! Yes, please, we can cry together while we listen to a sad playlist.😣

In summary, NFTs are

  • Trustworthy.

  • Unique,

  • Easily transferable and

  • hosted on the Ethereum 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 likamfive@gmail.com.

Thanks for reading!