GAINS NEWBIE CORNER — NFTs
Hey newbies and welcome to the GAINS newbie corner. 👋
The topic of NFTs is going to be explored today. 🚀
What are NFTs?
Imagine an art gallery, a virtual one with a display of many things available for purchase including images of random things including a cat, an ape, quotes, and even a digital toilet paper with flowers that can’t be touched or felt, well obviously because it is virtual.😳 Well, that’s quite what NFTs are. Absurd isn’t it?
Non-Fungible Tokens (NFTs) are verifiable digital art or pieces of digital content that are linked to a blockchain, the digital database underpinning cryptocurrencies such as Bitcoin and Ethereum. Most NFTs are on the Ethereum blockchain. NFTs can be drawings, videos, images of fonts, music, a page from an article or even screenshots of the most trivial issues on the planet.🖼
They can be bought and sold. What do you think of Twitter founder Jack Dorsey placing an autograph on his first-ever tweet “just setting up my twttr” and selling it as NFT?
As a matter of fact, “just setting up my twttr” sold for a whopping $12.9 million in an online auction. You might be wondering, why would someone purchase that and even pay such a huge amount for that? I mean, I could just take a screenshot of it and save it. Yes, you can but well that just isn’t about right. If it was that easy then there is absolutely no point to this whole NFT craze, right? There are a whole lot of controversies surrounding this and NFTs in general. This information leaves a lot of people befuddled, so you aren’t alone.
NFTs derive their authenticity or importance from their agreed-upon value and ownership. Non-Fungible Tokens (NFTs), as the name suggests, are unique and can’t be replaced with something else. They are unique digital identifiers that cannot be copied or substituted. It is recorded in a blockchain and is used to certify authenticity or ownership. Now, what is a blockchain? Worthwhile question. Simply put, a blockchain is a digital ledger of transactions maintained by a network of computers which makes it difficult to hack or alter hence a blockchain makes recorded transactions safe. When you purchase an NFT, you gain ownership of the original work which is something that cannot be copied and of course, the artist can still possess or hold copyright or reproduction rights just like real-life artwork. You get the right to transfer it to your digital wallet through a digital address that proves your ownership or can be likened to a certificate of authenticity which comes with bragging rights. An NFT can only have one owner at a time.
Interestingly, the NFT market exploded in 2021 with an estimated $26.9bn worth of cryptocurrency sent to Ethereum addresses associated with NFT marketplaces and collections.💰 So far, there are a plethora of marketplaces to buy and sell NFTs: Opensea, Rarible, SuperRare and Banq are just a few of them.
An NFT could represent GIFs, collectibles, music and even signatures. You might still be wondering why someone is willing to pay a huge sum of money for this. To be brutally honest, it doesn’t make sense to an extent and some of the NFTs are just so silly but the worth of something is what someone is willing to pay for it and it is speculative. It might not seem valuable to you but actually, it does for someone else, it is a form of investment and besides the flex of owning them are superb and endless.
Some of the most popular NFTs are Nyan Cat GIF which was sold for $600,000, Cryptopunks #7804 sold for $7.5 million and Bored Ape Yacht Club NFTs which are worth a minimum of $200,000.
Now, how did they gain so much popularity and how do they sustain or keep the hype going? Bored Ape and CryptoPunks are backed by a community with holders or enthusiasts of these tokens. These enthusiasts interact with each other and provide a source of support for these NFTs so it is less likely that the hype surrounding these NFTs will dwindle as more and more people scramble to enter such communities.
Some of the perks of NFTs are that it is an easy way to get rich quickly. Due to the copyright or ownership rights that come with NFTs, it offers you the owner royalties or a percentage of money anytime your work changes hands or owners. Great way to earn passive income!🤩
NFTs serve as a source of investment. You could resell an artwork for a much higher price so you could accumulate a huge profit from reselling an NFT. With NFTs, you could practically sell anything including virtual plots of land (Decentraland).
One drawback of NFTs is that it thrives on hype. One might purchase an NFT to hold as an investment. However, it might not be worth much in some time to come and or cannot be resold because no one is willing to buy it. What a bubble! The Ethereum gas fees associated with NFTs are also a huge turnoff. To add or list your NFT, you’d probably be paying about $100 which is quite exorbitant.
Are NFTs the next big thing? Are NFTs a bubble? Are they here to stay? Quite cliché but here it goes, time will tell!
Feel free to share your thoughts with us in the comment section.