NFT 101: Explanations our grandparents will understand.

But first, what the “F”?

To understand what an NFT is (Non-Fungible Token) it’s helpful to understand what “fungible” means.

Fungible is an item that is interchangeable, like a $5 note. All $5 notes have the same value, regardless of who is holding it. They can be exchanged, if you lose it and someone gives you another one, it’s OK, you can use the new one as it holds the same value as the one you lost.

Non-fungible is an item that cannot be replicated, there is only one, for example, your own personal iphone. There are millions of iphones out there but only yours contains your photos and your data. It has value to you, the owner, and you wouldn’t trade it with someone else for theirs.

Those are two examples of physical items that non-fungible. NFT’s are tokens, not physical items. What’s a token? It’s a unique digital asset stored on blockchain that cannot be replicated. It can be anything digital such as a jpeg (art), audio file (music), video file, or even a QR code.

There can only be one true owner or holder of the NFT and therefore only they can unlock its benefits.

For example, imagine your favorite fashion designer issues a collection of 100 NFTs. Each one is slightly different and gives the holders of those 100 NFTs special benefits. It might be an NFT that unlocks access to shop an exclusive collection of handbags when it drops online. In this case, the NFT verifies each holder and gives them exclusive access to a URL that allows them to shop, it’s called “token gating”. Token gating ensures the website only opens for those who hold the NFT.

In the future, fashion brands may “token gate” their limited edition collections whereby only the NFTs holders have access to shop.

The benefits can change over time too. Next season, the designer may announce that their 100 NFT holders will be the only ones who can claim invites to a runway show at Fashion Week in Sydney or New York. The NFTs can be used multiple times to unlock new benefits each time. This capability is exciting for brands and consumers as it creates a long lasting, VIP relationship between holders and products.

How does an NFT work?

NFTs are stored on blockchain which is a technology that cannot be copied, deleted or edited. Blockchain is a digital ledger that records every action that takes place, in real time as it happens. It’s like a digital truth serum which makes it perfect for authenticating ownership and verifying products like designer goods, art or limited edition items that may need to be authenticated or prove ownership.

Once an NFT is created it exists forever and the possibilities become endless. NFTs “live” on the blockchain in a crypto wallet. A crypto wallet (e.g. MetaMask, Coinbase, Zelus, Trust Wallet) store a user’s personal assets like cryptocurrency and NFTs.

Taylor Swift in concert. NFTs could offer her, her crew and fans many benefits instead of traditional tickets.

If Taylor Swift issued NFTs instead of tickets to her concert, both she and her fans could benefit in several ways.

1. It reduces scams and fake tickets: The NFT verifies owners and authenticates the ticket when holders connect their crypto wallet to enter the concert.
2. Transparency on the secondary market for ticket reselling: Consumers will be able to track and see where tickets are coming from to ensure it is a legitimate ticket they’re buying.
3. Royalties for Taylor and her crew: Instead of third parties who traditionally make all the profit in secondary sales, Taylor can receive royalties from the sale of every ticket resold and share that with her dancers, back up singers, stage crew etc.
4. Rewards for fans: After the concert, Taylor can keep rewarding her NFTs holders. They could use their NFT to claim free concert merchandise, download a new song release, or get discounts on VIP seating for a future show. The NFT itself becomes a valuable collectible over time that the NFT holders can keep and use themselves, or sell on the secondary market (like Opensea.io) and make a profit. And yes, Taylor and her crew can receive those royalties from the sale of the NFTs being resold forever! (A great way to reward the people on her team who helped make the show such a big success in the first place.)

What are NFTs used for?

NFTs unlock many capabilities and benefits across many industries. A few examples:

1. Art: Artists can authenticate their art and monetize their creations beyond the first sale. This is an important development for artists who typically do not receive the financial gains as their artworks appreciate in value over time. NFTs ensure they will receive a % of every resale in perpetuity (yes, forever!).
2. Collectibles & Membership: NFTs can be used to give members exclusive access to content, events, merchandise, and more. Later the holder can set their own price and sell the NFT to someone else, thus the original creator of the NFT and the person selling it can make a profit. The more a brand or company over-delivers on that membership experience, the higher the value of the NFT over time.
   For example, a sushi restaurant in New York issued a collection of 3,500 membership NFTs giving the holders the exclusive ability to make a reservation. If you don’t have an NFT, you can’t make a reservation. Holders still have to pay for their meal once they dine there. Over time the restaurant has delivered an exceptional experience and demand from people without an NFT has gone up. Since there are only 3,500 NFTs the value has also gone up and the original NFT holders are now selling those NFTs at a premium. Every time one of these NFTs is sold on the secondary market, the restaurant is also making 5% in royalties. That’s an entirely new revenue stream that has never been possible before
3. Fashion: NFTs can reward loyal customers, give them access to exclusive benefits, product drops and experiences. Luxury designers like Chloe are starting to use NFTs to authenticate products so consumers can be assured the products they are buying on consignment sites are real and Chloe can receive a % of those sales in perpetuity also.
4. Music: NFTs can be used to sell and trade unique digital music assets, such as album artwork, music videos, and audio files.
5. Identity: NFTs can be used to represent and secure personal identity information, such as passport details, medical records, and other sensitive information.

These are just a few examples of how NFTs are used, and as the technology evolves, new uses and applications are going to emerge.

A lot of creatives are now selling their art as NFTs, are NFTs the future of fine art collecting?

NFTs have the potential to revolutionize the way fine art is bought, sold, and collected, by providing a secure and verifiable way to prove ownership and authenticity of digital art. They also offer artists a new way to monetize their creations and reach a wider audience.

Once you purchase an NFT, does that mean you own it? What can you do with it?

You can keep it and use it to unlock benefits that the creator of the NFT provides, or you can sell it on the secondary market.

Why are NFTs becoming popular?

Overall, the combination of unique ownership, monetization opportunities, decentralization, scarcity, and easier accessibility has made NFTs an attractive option for a wide range of individuals and industries, contributing to their growing popularity.

A few reasons:

1. Unique ownership: NFTs allow individuals to own unique digital assets, such as art, music, and collectibles, providing proof of ownership and authenticity that cannot be duplicated.
2. Monetization of digital content: NFTs offer artists and creators a new way to monetize their digital creations, by enabling them to sell and trade unique digital assets and reach a wider audience.
3. Decentralization and transparency: NFTs are stored on a blockchain, providing a decentralized and transparent ledger that records ownership and provenance information. This information is immutable and can be easily verified, providing a secure way to manage digital assets. Consumers will find it very useful in tracing the exact origins of products they buy. Currently we have to believe brands when they tell us something is made sustainably, in the future, we will be able to see exactly how and where something is made through the blockchain, it’s called “product provenance”.
4. FOMO and scarcity: The limited supply of some NFTs and the potential for rapid appreciation in value has created a sense of FOMO among buyers, leading to increased demand and popularity.
5. Global speed: The rise of decentralized marketplaces and the increasing popularity of cryptocurrencies has made it easier for individuals to purchase and trade NFTs. This make global trade instant and easy for anyone with a wifi connection. No fees, no middle managers.

Who is making waves in the NFT space?

Dolce & Gabanna sold $6M work of digital fashion NFTs in 2022.

Brands have tested specific ideas and some have been more successful than others. Nike and Dolce & Gabbana have dropped NFTs and focused on digital fashion. Alo Yoga dropped a physical clothing collection that came with an NFT and it unlocks access for holders to visit their wellness studio and attend exclusive yoga classes in Miami, LA and NYC.

NFT Holders collect the physical fashion featured in the artwork of their MAVION NFT to wear in real life.

At MAVION.World we’ve focused on connecting physical and digital fashion to create new opportunities to connect consumers who love limited edition fashion with global designers. There are 5,000 MAVION NFTs, each one features the artwork of a limited edition accessory (earrings, ring, necklace, bag etc), some are more rare than others. Holders of the NFT can claim the physical accessory featured in the artwork of their NFT and it will be handmade by designers from around the world and shipped to each holder. The MAVION NFT also unlocks access to exclusive MAVION events, digital fashion, and access to partner benefits of other designers inside the MAVION world.

Holders must have the matching accessory in their NFT artwork to receive the limited edition physical item.

The next evolution for MAVION NFTs is to turn the artwork of each accessory into a digital asset so it can be used in gaming and Metaverses. While there might only be 50 pairs of physical earrings, we can scale scarcity by creating millions of digital earrings that are bought and sold in a game while our holders and the designers receive royalties every time a unit is sold. For us, NFTs are a way to give consumers ownership of their favorite fashion brands and reward them with economic empowerment and benefits.

What’s the difference between NFTs and Cryptocurrency?

NFTs and cryptocurrencies, such as Bitcoin and Ethereum, are similar in that they are both stored on a blockchain and can be traded and transferred through decentralized marketplaces. However, there are some key differences between the two:

1. Nature of the asset: NFTs represent unique digital assets, such as art, music, collectibles, and more, while cryptocurrencies represent a fungible form of currency, where each unit is interchangeable with another.
2. Ownership and scarcity: NFTs are unique and non-interchangeable, meaning that each NFT has its own distinct ownership and provenance information. Cryptocurrencies, on the other hand, are fungible, meaning that each unit is interchangeable and the ownership of the currency is more abstract.
3. Value: The value of NFTs is based on factors such as scarcity, demand, and the perceived value of the digital asset it represents, while the value of cryptocurrencies is primarily determined by supply and demand, along with other market factors.
4. Use cases: NFTs are primarily used to represent and trade unique digital assets, while cryptocurrencies are used as a form of decentralized digital currency, and can be used for a wide range of transactions, including payments, remittances, and more.

Should everyone be jumping on the NFT train?

In 2002 people asked, should every business have a website?

It was new and confusing. Many didn’t understand the “web” and they didn’t have the tools to use it with ease. Luxury brands like Chanel resisted until 2016 when they finally launched their e-commerce website.

In 2023, we know that a website is an essential component to operate a modern day business and for consumers, it’s very easy to use. The same is true for NFTs. Currently it can be a clunky experience for the consumer. It’s all very new. At some point, NFTs will power the backend of many platforms and daily experiences and consumers might not even know it’s an NFT, they’ll just know that it was an easy and rewarding experience with a brand they like.

NFTs will also change the daily operations of our lives, how we work, go to school etc.

For example, we currently update our LinkedIn profiles and write our own work experience profiles. No one can stop someone from embellishing details on their LinkedIn profile. I could write that I was the VP of Marketing at Sephora (I wasn’t) or that I am the current CEO of Nordstrom (I’m not) and no one can stop me because today no verification is necessary. In the future, every job we have, every education class we take will issue an NFT to verify what each person has actually done. It’s called an SBT (Soul Bound Token) and it can’t be bought, sold or traded. It’s an NFT added to your profile, forever. When that happens, we’ll be able to see with 100% accuracy and transparency, the real experiences we’ve each had. It will be a seamless and automated process in how we live, work and go to school. SBT’s are great for personal identity data like birth certificates, travel visas, medical information and more. Basically, in the future, your crypto wallet will say more about you than your LinkedIn profile; it will tell others where you’ve been, what schools you attended, jobs you’ve had, and so much more.

What is the future of NFTs? Are they here to stay?

The future of NFTs depends on several factors, such as technological advancements, regulatory developments, and market demand. One thing is for sure, NFTs are changing the way we think about ownership, access, and community in the physical and digital world.