What are NFTs and why is everyone obsessed with them?
If you played Splinterlands, Chain Clash or 9Lives Arena, you might have seen the word ‘NFT’ here and there. In fact, if you look at the crypto space, every day, there’s a new story, a new discussion, a new NFT auction and so on. Media report that in one day in 2021, NFT sales toppled the entire 2020 levels — and their popularity will continue to grow. So what’s behind all the hype and how can you get into NFTs?
First things first: what are NFTs and what makes them special?
NFT is an abbreviation for ‘non-fungible token’ — in essence, it is a token like EOS or pBTC or anything else you hold or swap. But there’s a fundamental difference — it’s a unique token that isn’t interchangeable with others. Think about it that way, when you spend EOS, it doesn’t matter to you if it’s the EOS you got from a reward pool or if it’s part of EOS you recently bought — because essentially, they are just a number, a measure of value.
NFTs, however, have their own ‘unique ID’s’ that set them apart from all other tokens of that kind. This ensures the uniqueness of every non-fungible token. How would you swap one of the five vases of a particular design for the only full-diamond case ballpen in existence? Even the only comparison you can draw — their respective prices in EOS, ETH, fiat or anything else — falls apart because you only have one unit of each and cannot ‘adjust’ amounts to make their relative value even.
Because NFTs are still tokens, their owners can freely interact with them as they please without the issuers’ involvement. Some NFTs, primarily digital artwork, can even be further customized by owners across multiple layers. That makes such tokens not just one-of-a-kind but entirely yours to make it even more special. For example, KittyHats allows the Cryptokitties community to create and equip their kitties with fan-made hats and other accessories. Those items are fully supported in the game — without a license or soliciting by the game’s creators.
What kind of NFTs are out there?
NFTs exist now in many forms, across all kinds of blockchains and dApps. The main niches where NFTs are currently blooming include:
- Art. Digital art, however complex it might be, is still easily reproducible. After all, it is just a file, a sequence of 0’s and 1’s. It’s also much easier to create an exact copy of a digital piece than a physical painting. Tokenized artwork creates complete transparency for collectors, keeping complete records of ownership, supply, series, etc. For artists, NFTs and their metadata offer extra copyright protection and less effort when proving the authenticity of their work.
- Gaming. Gamers have mostly experienced NFTs either as playable characters (an Axie or a Chain Clash avatar) or a high-rarity in-game item (equipment in the Minecraft MyMetaverse). Unlike in traditional games, the blockchain component here safeguards real ownership here — that means, even if the game shuts down, you will still be able to access, store and trade your NFTs from a different interface. Or, if you want to quit playing, you will always be able to sell your NFTs and get some of your investments back.
- Collectibles. The collectibles sector is a rather old hobby reimagined in a digital world. Have you, as a kid, hoarded sports cards or chewing gum inserts with sports cars or bits of wisdom on what true love is? Collectibles NFTs trigger the same passion, offering the safety for your precious lot never to get lost to spring cleaning or a yard sale. Some collectible projects like the celebrated NBA Top Shot, follow the exact same model, immortalizing players and iconic sports moments. Top Shot alone has made over $50 million in sales.
From this, it turns out, you might have already held an NFT or two — see, it’s not that much of an uncharted territory after all! The question is, what to do once you’re at, or barely past, that entry point to NFTs?
What can you do with NFTs?
- Create and sell NFT art. While the highest-selling artwork is entirely unique, many creators either compile existing images into their work or digitalize analog pieces.
Renowned artists easily sell a piece for hundreds or even thousands of dollars. If you don’t feel like braving the big art world just yet, you can still make a couple of EOS from something simple but meaningful — like many others in the EOS community. - Sell characters and items in games. Unlike decades back, it is way easier to trade these between players — if blockchain is involved. Just like the gamers of old, you can create, upgrade and nurture playable characters — or hunt down epic loot! — to resell it with some interest.
- Become a collector. This is more of a long-term game where you also have to factor in the risks. What if major cryptos crash, and you’ll have to sell low? Or what if this particular artist will grow out of fashion? Still, if profit is not what you seek, it’s a great way to gather pieces that have a unique meaning just for you, starting from favorite game characters to short footage from memorable days. On top of that, you can make a significant social impact with projects like UpLift Art or WHALE.
Wrapping it up…
NFTs hold a lot of promise, both for those who want more investment tools and those who seek something more than the transactional value in crypto. There are many ways to get involved. If you think this is something for you, we recommend hopping into your favorite games or checking out some artists for inspiration first. Whenever you’re ready, you can always create your first NFT on Atomic.
