If you’re following ArtMeta, no doubt you already have a good grasp of what NFTs are and the huge potential they hold within the Web 3.0 world we’re moving into.
This post is not for you.
This post is for your friends — the ones who still don’t get it. The ones who ask you for tutorials or training sessions. We wanted to give you the best and most simple copy-pastable guide to send them, to curb your waning patience, so you can keep your relationships intact.
This will be a 6 part series covering the following:
- What is an NFT?
- The different types of NFTs
- How do I create an NFT?
- How do I purchase an NFT?
- How do I sell an NFT?
- The future of NFTs
Without further adieu — What is an NFT?
NFT stands for non-fungible token. A non-fungible token is a kind of cryptoasset which has to be completely unique. Unlike cryptocurrencies, NFTs cannot be traded or exchanged at equivalency.
Fungibility is the ability for goods or assets to be swapped interchangeably which are of equal value. There is a supply level, just like regular currency — fungible tokens or cryptocurrencies do not need to be unique. For example, a bitcoin is fungible — you can trade one unit of Bitcoin for another and you’ll have the same type of token, you can also collect Bitcoins and have multiples of the same token.
Yet, if you have a one-of-a-kind asset, such as the Mona Lisa — you cannot trade this for another Mona Lisa, because there is only one. Think of an NFT as the digital version of such unique assets.
What is stopping someone from copying the digital asset and trying to pass it off as their own?
An NFT encloses identification data for ownership and transfer between token holders by using blockchain technology. This means anyone is able to access the ledger and see who created the NFT, how many times it has been sold and for how much.
Put simply, anyone can buy a Picasso print but only one person can own the original.
So hypothetically if you were looking to buy the one and only Girl with a Pearl Earring, you could trace Johannes Vermeer’s wallet address on the blockchain, see how many times the artwork has changed hands, if it has gone up or down in value over time, and then ultimately find the current owner and the price they paid for it, before making an offer on the piece. And because this information is stored on the blockchain, it cannot be erased or tampered with, giving consumers confidence in authenticity.
This opens doors for ultimate transparency in the art world like never before. This removes the smoke and mirrors approach to buying art, and gives customers ultimate decision making power over their investments.
NFTs can be purely digital assets, or they can be a digital proof of ownership of a physical asset. Going back to the Girl with the Pearl Earring example — the smart contract can state that the sale of digital must be accompanied by the physical in order for the transaction to take place. Similarly, some art was born and sold as purely digital, where the owners of these assets have the right to use them for any purpose — they can make physical posters, printed t-shirts or hoodies of their NFT and sell them if that’s what they want to do, essentially the owner of the NFT owns the IP of the artwork and may use it for any purpose they wish.
There are many types of NFTs but in regards to the art world they can be made from digitizing photography, art, music or video files. Tweets and memes have even been made into NFTs. The world of NFTs is quite expansive, you can essentially create NFTs from almost anything unique that can be stored digitally and holds value.
Stay tuned for Vol.2, where we explain the different types of NFTs.
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