What are Non Fungible Tokens (NFT)? Aren’t They Just Really Expensive Art? How do you buy them?
An NFT sold for $69 million. What are NFTs? And how you can obtain these jpg images without paying all that money.
This picture here sold for 69 million dollars online. And no, there’s no physical art piece hanging in the Museum of Modern Art (MOMA) or Du Louvre — the buyer paid all that good money for digital art.
“But wait”, you say, “Can’t we just simply download the image from the internet just like you did?”
“What’s an NFT anyway? What makes NFTs so special?”
To which, I reply, “yes, you can download it, but it’s worthless”, and “read on to find out what is an NFT!”
What is an NFT?
To illustrate why simply owning a jpg of the NFT is worthless, we have to first understand what an NFT is. An NFT is a Non-Fungible-Token. Simply put, it means that it’s unique and non-interchangeable.
Every single NFT on the market is special with its own token identification (token ID) tagged onto the blockchain. This allows investors to know if artists are selling you the real deal. This is different from fungible coins such as Ethereum, where there is no difference between one unit of your ETH and one unit of my ETH. The same concept applies to fiat currency such as USD. Your USD is as good as mine.
In short, Non-Fungible-Tokens are unique, while Fungible-Tokens are indistinguishable.
This is why I think it’s not as meaningful to simply download the jpg of the image. What the investor is buying is not simply the image, but also the one-of-a-kind token identification that tells you it’s unique.
How to download the 69 million USD image for free?
You can simply Google “everydays the first 5000 days” and save the jpg under Images.
How to buy NFTs?
Let’s say you decide not to merely download jpegs from the internet but actually purchase one for yourself, what can you do?
Well, there are many different websites to purchase NFTs from. Various websites operate on different blockchains and have various niches. For instance, OpenSea is the most popular NFT site and is based on the Ethereum network. You can find famed artists there such as CryptoPunks. The drawback, however, is that because OpenSea is on the Ethereum network, transaction fees are very high. It could be that your transaction fee could cost more than the actual art piece.
For somewhere with lower transaction fees, Binance.com operates on the Binance Smart Chain, which has comparatively lower transaction fees.
How to find good NFTs?
Before we think about what makes an NFT expensive, let’s first think about what makes your iPhone worth the price that it is. The cost price of making an iPhone is about $400. However, customers like me buy it at more than double the cost. The reason why we buy it nonetheless is because there is hype and recognition.
This reasoning applies to NFTs. Take a look at Twitter and see what is popular now. Observe which digital artist is gaining traction. That may be a good bet.
What are the risks while investing in NFTs?
Always perform your due diligence. Investing is always risky, and you have to research before making any decision. Here are two main risks you should take note of and how to lessen them.
Liquidation risk
This means that it may be difficult to sell the NFT after you purchased it. And as a result, you may have to sell it at a much lower price if you decide to let it go.
To minimise this risk, make sure that there is enough hype around the artist and not just the artwork. This means that people will be willing to buy your NFT because it was created by an artist you purchased from.
Fraud
There may be artists who impersonate famous artists in order to make a quick buck.
Always make sure that the website you buy from is credible and there are sufficient organic transactions from the artist before you buy.
Fortune coin created a Nasi Lemak NFT
Fortune coin has created an NFT to celebrate its Fortune coin release. There are Chicken Drumsticks, Otah, White rice, and many more components that are integral to a good Nasi Lemak. You can purchase your very own Nasi Lemak NFT from Mintable. And take a look at the article here. With the entire set purchased, you can actually claim a free Nasi Lemak meal from Fortune Coin’s founding company, Old Village Cafe.
Concluding words
In summary, NFTs are unique digital tokens. This is in contrast to fungible tokens like ETH, where your ETH and mine are the same. You can buy NFTs on OpenSea or Binance.com, but always take note of risks.
There are always risks you bear when Investing. Always perform your own research. This article is meant for educational purposes only. Any decisions you perform are your own and not that of the writer or the publishing entity.
