NFTs: Introduction to the Non-fungible Future
Why do NFTs Exist?
We are still early, prehistoric even when it comes to the NFT ecosystem. We have seen unparalleled amounts of enthusiasm in the space but with that does come skepticism which we will try to nullify with this article.
NFT stands for “non-fungible-token”, but what does that actually mean? An NFT is best understood as a digital asset, they exist in numerous industries such as digital art, digital real estate, trading cards, 1 of 1 collectibles, in-game assets, and even music. The possibilities are endless.
Anything can be turned into an NFT, even this article, and its reading rights, and be traded on marketplaces such as Opensea and Rarible using currencies like ether and USD stable coins.
We as humans communicate to a large extent through our purchases. This is why the fashion industry exists. We have now become obsessed with our digital identities and personas, becoming just as, or even more important than their real-life counterparts.
This is why NFTs exist.
Fungible vs Non-fungible, What’s the Difference?
Fungibility refers to whether or not an asset is directly and evenly interchangeable. For example, a $100 bill is fungible because it can be exchanged for another $100 bill that holds the exact same value, and therefore can be considered the same.
On the other hand, non-fungibility can be explained when comparing two 1st Edition Charizards, to the traditional world they may appear to be the same. However, small distinguishing factors such as centering and coloring separate them making them non-fungible and impossible to interchange.
NFTs can be viewed in the same light, distinguishing factors such as the mint date and even customized names play a significant role in determining value, even if the NFTs are identical and from the same release.
All NFTs are distinguishable from their metadata, ultimately, the component that makes them non-fungible. The metadata also provides the stamp of authenticity on the blockchain, the provenance if you will.
Buying, Selling, Minting. Where, Why, How?
The creation of an NFT begins with a piece of digital content, as mentioned, the world is your oyster and this could be pretty much anything. A photo, a drawing, a song, or an in-game asset.
Platforms like Opensea and Rarible provide simple DIY tools for creators to start their NFT journey; however, many highly technical and highly custom methods do exist too.
A Place in our Hearts
The word or term NFT may be completely new to some but some of its core concepts have been lingering for years. These have played a large role in the asymmetric growth we have seen in the industry and can be traced back many many years.
NFTs and the act of collecting rings bells of nostalgia for the sports card youth, many of whom now find themselves at the helm of powerful crypto circles. The art of trading and negotiating hits home with the roaring nature of modern-day entrepreneurs and C-Suite executives. We have seen a flood of creativity and creatives move into the ecosystem. Artists as old as 80 and as young as 8 now have borderless opportunities to share their creations to an audience previously untouchable and we have seen a resurgence in the art world as a whole. The NFT world also plays into social community building, a phenomenon present at the start of the dot-com era, the only difference is that it is now decentralized and possible to monetize.
This is the beginning of the digital art and asset revolution and there is nothing we can do to stop it.
The True Value
NFT value can be understood and derived through three key parameters:
- Utility
- Social Communities and Currencies
- Access and Subscriptions
These concepts are more familiar than you think. The NFT concept can be assimilated to credit card rewards, monthly subscriptions, VIP concert tickets, and on a deeper level, microtransactions, gamer skins, and even gamer tags. We could even go so far as saying that if you have ever purchased virtual, in-game items such as skins, you already understand NFTs and their value in society.
The reason you had the desire and need to purchase that asset was because of the utility it offered in a virtual, but highly relevant world. Bragging rights, in-game flexing, self-fulfillment, are all relevant forms of social currency.
The reason people are flooding the NFT industry and buying digital assets they can never touch or feel is the same reason people wear designer clothes and drive high-end vehicles, or hang pictures on their walls painted by important people that may no longer be around.
It’s the same reason social affirmations such as certified ticks on Twitter or blue ticks on Instagram. In the very near future, we believe that checking through each other’s digital wallets and bonding over NFT interests and mutual purchases will be the norm. Everyone will have some sort of exposure to an NFT project or asset, the same way everyone has a social media account.
Looking back in Summary
Taking a look back over this piece we can highlight the key factors playing a role in the NFT ecosystem:
- We are still very early and much is to be learned and understood still.
- An NFT can be viewed and understood as a digital asset. All the following can exist as NFTs: photos, drawings, songs, social Media Accounts
- Humans communicate in their day-to-day lives through things like fashion and their digital lives through NFTs.
- Fungible tokens can be directly interchanged and hold the same value. NFTs cannot be directly interchanged and do not all hold the same value even if from the same release.
- NFTs carry a sense of nostalgia alongside the resurgence in the collectible card market and have become catalysts for the next arts and cultural revolution.
