NFTs explained for Beginners and Non-Gamers
Understanding the very basics of this and what is happening in the NFT space
Everyone is mentioning NFTs and it is the buzzword making headlines with people selling their tweets, memes and even cat pictures as NFT for millions of dollars. Hell! I even heard a guy sell a series of 331 selfies of him ( just standing in front of his computer) as NFTs and valued today at millions of dollars. 💲
Those numbers really make you wonder, right? Check the embed for more details or watch the video.
So let me explain NFT simplified for a non-gamer, beginner, non-crypto person.
Three terms are imp in the currency exchange mechanism in the upcoming Metaverse economy- Token , Fungible token & Non-Fungible Token (NFT)
- A Token — — is an asset or utility that allows the holder to use it for investment or economic purposes.
- A Fungible Token — those tokens ( or assets)which are inter-exchangeable like Bitcoin.
- A Non-Fungible Token ( NFT) — those tokens ( or assets) that are unique and not interchangeable.
Now let’s come out of this crypto world and into real life to help understand this.
A real world scenario for non-gamers
Imagine you are in school.
1. Monday lunch scene
You got a Kitkat chocolate bar of $5. Your friend also got the exact same Kitkat chococlate bar of $5. You could exchange and eat — exact same exchange, same value.
Your choco bar ( your asset) is your token and this is a fungible exchange like Bitcoin or dollar note — something has the same value as the other thing here. It’s like saying I gave you my $5 lunch money and you gave me your $5 — -no win, no loss. Our exchange is equal and exact — Fungible. So all is cool! 🆒
2. Tuesday lunch scene
You got your mom-made special chocolate cake — one full large cake (yum…its moms secret recipe, no one knows the ingredients and she bakes the best cakes). Your friend again got Kitkat chococlate bar of $5.
Q: Will the two lunch hold same exchange value today ? NO, not at all. This would be Non fungible — exchange value is not same because your asset is unique.
Q: Can any other tiffin in school today hold the exact same exchange value with you? NO.
Your asset (mom’s cake) is now a Non Fungible Token. It can no longer be exchanged in the same way as Monday lunch — but oh yes- “it still has value”.
It has value because it is rare , it has utility, tangibility and customers (friends) are craving it. So now you want to trade your NFT/asset ( mom’s cake). You can “make an offer” — — pricing is determined by the owner. You made your friend an offer $50 for the cake and he agreed to pay. Or you could fractionalize the NFT ( cut the cake into pieces & sell the pieces in school ) and earn more maybe — depends what friends are willing to pay!!
Now teleport into the Metaverse economy 🚀 🚀
Let’s look into the digital world of crypto and the developing metaverse. Replace mom’s cake with virtual collectibles — a painting, a song, a meme. A cake will be eaten up and finished but assets that have long lives like songs, paintings etc have a lot of utility in future and create usage possibilities for the buyer of that asset/NFT.
These collectibles are what are being traded commonly as NFTs today on platforms. Since all these digital assets are on some form of Blockchain — it ensures transparency so the sale here determines the true owner of the digital collectible asset. (Read more on blockchain and metaverse to gain clarity)
So if you own an NFT — you own the only true single, unique digital piece existing in this world & you can prove it too because you are given a certificate & a whole chain of transaction on-chain to show this!!
Why would someone want to own unique collectibles ?
Your answer lies in the same reason why would someone want to own an original Da Vinci or the copyright to Beatles song catalog. Collectibles have always been unique and highly paid for. Premium, unique, displayed on fine walls, adored by everyone and a representation — a representation of time, idea, concept, story, and era !
With NFT there is an additional new opportunity — NFT presents me the option of creating usability for the collectibles purchased. So if let’s say I have purchased 400 selfies of a cat- I could make a cat movie out of it. If I have a book NFT — I could turn it into a movie, create a sequel or write a series or create a fantasy land experience park based on the book. I am the only proven owner and only I can do this and more! Wow!
Opens a whole bunch of possibilities. In my next article we will speak on these possibilities.
Hope this helps for now. Keep reading ! Keep learning!
