Wall St Fam: Your EASY Guide to NFTs
Welcome, Wall St Fam! The world is changing fast. Crypto has rocked the financial system and blockchain technology has changed our understanding of ownership. Look, I know…crypto haunts you.
Temptations to buy the dip, dreams of massive windfalls, fear of missing the ride.
You’re not late.
This is a crash course on everything you need to know about the NFT landscape, assuming you know nothing. What are NFTs and why they’re valuable– the insights you’ve been searching for! You don’t need to be an expert to learn how to win.
Our insight comes from real-world experience developing NFTS, crypto tools and building NFT communities. This post is reserved for those serious about being successful in the NFT space, but who are pressed for time.
It may be a bit long–about 10 minutes. But if you’re brave enough to read it, then you won’t be sorry. Grab a pen and paper and take notes.
To the lazy ones, I say “Ignorance is bliss…I guess.”
Quick background to catch you up: Bitcoin, Ethereum, and Smart Contracts.
Let’s start with Bitcoin. Think of Bitcoin as a checking account in which you send and receive money without the middleman (i.e a bank). That’s its only function. You can’t do anything else. The software behind it is complicated, but what you need to know is simple.
Ethereum is an open-source blockchain. ETH (pronounced eeth) is its cryptocurrency. Similar to Bitcoin, except you can easily build applications on it: decentralized apps (aka Dapps), smart contracts, and NFTs.
Ethereum’s great for services that traditionally require a middleman and uses software instead to create smart contracts — think of them as programs with set rules.
For example: If I wanted to make a bet I might say, “If the Lakers beat the Knicks tonight, I will send my friend Brian money.” If both Brian and I have digital wallets, and he has little to no faith that I’ll make good on the bet, then we can either enlist the help of a bookie…
…OR we can put our bet in a smart contract. “If the Lakers beat the Knicks tonight, my wallet will send Brian’s wallet money.” No need for a middleman or mutual trust.
An ETH address is a public address connected to your Ethereum wallet that allows you to send and receive funds.
What are NFTs?
Talking about NFTs is like talking about the internet back in 1995. It’s that revolutionary.
Here’s the technical definition:
An NFT is an immutable record on a smart contract in which all information and changes to that information are transparent.
Let’s break this down. Non-Fungible Token. In crypto, the token is a digital asset that can’t be exchanged equally because it has unique properties, making it non-fungible.
One U.S. dollar is fungible because it’s always equal to 1 dollar and can be exchanged for another. Nothing about it is unique.
By contrast, NFTs are unique tokens. Their ownership is tracked on the blockchain. The challenge before this technology was that digital files could be easily copied and distributed with no way of knowing their history.
How do you know who the original owner is if everyone has the file? How do you know the file you just bought isn’t a forgery?
NFTs solve this problem by making all changes to this unique token transparent to everyone. Changes like ownership, how much it’s been sold for, evolutions, upgrades, etc. Anything. The key is transparency. All history is always recorded.
So no, you can’t just copy and paste some NFT art and say you own it. No matter how hard you try, everyone will know which NFT is the original work and who it belongs to. The NFT represents ownership and public validation.
Let’s classify some common types of NFTs
Anything that’s unique and needs proof of ownership. These are just to name a few:
- Digital art
- Rare items
- Blocks of time
- Membership (more on this later)
Quick example: Hosts of the podcast My First Million sold an NFT called 5 Minutes of Fame representing 5 minutes of airtime on their show. The hosts programmed the rules of the NFT in which the owner of it can use the allotted 5 minutes for anything on their show: pitch, talk shop, advertise, etc.
How are NFTs made unique?
The token is assigned a unique ID number. So when you own an NFT, it means your ETH address is associated with that number. That number has an associated URL that points to where the digital asset is located. More specifically, the metadata pointing to the asset. And the asset could be an image, video, etc.
99% of NFTs are like this.
NFTs don’t have to be on Ethereum. They simply have to be on a smart contract enabled blockchain. Other such blockchains include Solana and Cardano, to name a few. Ethereum is simply the most popular with 80% of the NFTs in existence programmed on it.
Smart contracts follow a specific standard that has a particular set of rules so that any application can see the smart contract as an NFT.
So for example, the Wall St Fam community has its own smart contract that follows the ERC-721 standard–the most popular one for NFTs.
Why are NFTs valuable?
Every single person will use NFTs. Think about it. Toddlers today already use the internet.
The problem with the big tech platforms (Facebook, Twitter, etc.) is that they box your identity in a way that works for them. So they can package it up nicely and sell your juicy data.
You’re the product.
This creates a representation of you that is not only limited, but that you currently don’t own. You know this boxed identity does you no justice.
Even worse, you’re forced to sift through a crowd of people you don’t like to get to a small group of people you actually enjoy being around.
This is where it gets fun.
In the near future (let’s be honest, it’s already happening), your profile pics will represent you in the digital world and will be read off a smart contract platform like Ethereum. Twitter’s just starting. Meta (the company formerly known as Facebook) is building it in.
What’s being created is the digital reality layer. You’ve heard this being referred to as the metaverse.
Let’s take a step back for context.
Bitcoin has a protocol that incentivizes people to publicly verify what happened in a given moment of time. “My wallet sent money to Brian’s wallet.” And everyone knows it–that’s its key innovation. Ethereum does the same thing, but with more complexity.
This is important to understand because an NFT is a digital object that has its own unique representation like objects in the physical world. Think of a rock. No two rocks can ever be the same. Each one is unique. No two IKEA tables are ever really the same.
No NFT can ever be the same on a given smart contract because they have different token IDs.
Where it gets interesting is the use of NFTs to show that you’re part of a club. These tokens are used as profile pics showing you’re a member of that community. Think Crypto Punks, Bored Ape Yacht Club, Wall St Fam.
We all crave to be part of a collective bigger than us and that represents our values. This is where profile pics step in. But it’s more than just having a token that looks like you.
An NFT profile pic is an ID card that grants you access to a club. Similar to a Costco membership card with your face on the back. You can’t get into nor shop at Costco without it. Or how a passport is needed to travel between countries.
Unlike Costco memberships and passports, you can have as many NFTs as you want. Collect them as you see fit and curate the representation of you that you want the digital world to see.
Just like a passport, the NFT holder gets benefits as a member and agrees to adhere to certain rules.
NFT Communities
This is where you win. Joining the right NFT community is like being on the board of a Fortune 500 company.
These communities are similar to a mini country: currency, passports, and governance. And like a country, there needs to be productivity.
The best groups offer benefits to their NFT-carrying members with social tokens (i.e. ERC-20 tokens) being at the core. These tokens allow members to be active participants: vote, make proposals, and take actions that drive the success of the group.
The products and services provided by a group are only for members and can only be acquired by the use of the group’s social tokens. Set rules are voted in place and all actions taken are completely transparent. Members can opt-in or out anytime they want.
Democracy at its finest… some might say.
Congratulations. You’ve reached the end of the post. I hope you learned a thing or 2.
I’ll be releasing more posts that get more into the details of the NFT space to help you win.
Stay tuned.
Disclaimer: None of this is legal or financial advice of any kind. These are just opinions and insights from a group of parents who’ve spent an obscene amount of time in the NFT space and are building something awesome for it.
