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It is very easy to feel out of the loop these days, if you put down your phone and treat yourself to a tech-free day you can come back to blockchain explosions and revelations that simply make no sense. In the time you have walked around the neighborhood you might find that Gamestation has crashed the stock market or a celebrity picture has broken the internet. If you have been following any recent news you may have heard that Grimes recently made 6 million dollars with an NFT sale, you also may be aware that Nyan Cat was recently sold as one.

With a little digging, you can get a basic idea of the one-off digital art concept but as with everything in this day and age, the concept evolves rapidly. Just when you think you know what is going on suddenly Jack Dorsey is selling his autographed tweets. So what’s the deal with NFT’s?

Mitchell Clark put in the leg work for a recent article at theverge, that involved countless hours of reading and maybe even a few genuine tears so that we can all wrap our heads around NFT territory. So let’s make sure his sacrifice wasn’t for nothing and help shed some light.

SO, WHAT EXACTLY IS AN NFT?

First off NFT is an acronym for Non-fungible token, now that that’s clear you can all go about your business right? Well not exactly, okay let’s start at the very beginning Julie Andrews style.

The term “Non-fungible” is basically an expression for totally unique and importantly non-replaceable. with something else.

We could refer to bitcoin as fungible, you can trade and interchange them but you still have the same thing at the end of the day. 

If you have a one-of-a-kind trading card then it has an identity of its own. Whatever you trade it for will be different. 

None of which is tricky to understand, it would be the equivalent of swapping a prized pokemon for a 1909 T206 Honus Wagner baseball card; as Mitchell put it referring to a StadiumTalk article that compared it to the Mona Lisa.

So in layman’s terms, we understand the idea but what is the value of it and how does it relate to cryptocurrency, and why are blockchain companies invested?

If you are still with us this far, stay strong and read on!

How NFT’s Work…

NFTs are part of the Ethereum cryptocurrency blockchain. Ethereum works in much the same way as bitcoin or dogecoin, but its blockchain nature supports NFTs. This allows it to store extra information. There are other blockchains using NFTs for uniqueness and data such as TRON and others are either following suit or looking to.

What is available in the NFT supermarket?

If fact, NFTs can really be anything digital, for instance such things as drawings, music, or even your brain downloaded and turned into an AI. And yet, a lot of the current excitement is around using the tech to sell digital art.

Dogecoin NyanCat mashup NFT
Dogecoin NyanCat mashup NFT. GIF: NyanCat on OpenSea

Great news for artists but it doesn’t seem to have stopped there…

NFTs are being touted as a modern-day evolution of fine art in a digital form.

As Mitchell points out at theverge though, this doesn’t stop non-artists from selling their tweets to the highest bidder. Quite comically he coined the term “buying my good tweets,” in order to conjure up such a ridiculous notion for NFT application. Yet just days after theverge’s article was posted, the Twitter founder himself did exactly that! 

Could it really become a serious form of art collecting?

Well, it is sometimes tricky to distinguish a fad in the early days. NFT sales are certainly a hot topic and trending with many jumping in on the action. The popularity of the latest tech has been growing steadily for a few months and plenty of people are making a mint too. So long as we have people in this crazy world who are willing to part with $390,000 for a 50-second work by Grimes or $6.6 million for Beeple video it is anybody’s guess as to how huge it could become. Actually, Christie’s is auctioning a famous Beeple as we speak.

NFT’s can stop image theft
NFT’s can stop image theft Image: Beeple

What is to stop people from downloading the same file someone paid millions for?

Here’s where things get a bit more complex. Digital files can be easily copied with a simple right-click action NFT works.

Yet, the NFTs are made to provide you with something that can’t be copied. It can be, for instance, an ownership of the work, even though the artist can still retain the copyright and reproduction rights, just like with physical artwork. To put it differently, basically anyone can buy a Monet print now. But only one person can own the original.

Okay, so some people are probably now thinking where do people get off in comparing a Beeple to a Monet? If you buy a Monet you get a physical tangible object for your cash. Where digital art is concerned any downloaded copy is the same as the last surely? 

Well, that appears to be purely down to opinion.

The truth of the matter is some are clearly not making the distinction. There are countless examples and art is subjective (but probably respective to your bank balance). The Gucci Ghost pictured below originally sold for $3,600 but is back on the market for almost four times the amount.

Any Takers?

Gucci Ghost
Gucci Ghost is currently on the market for $16,300. GIF by Trevor Andrew

So what’s the point?

An artists пoldmine

The benefits of NFT sales from an artist’s perspective are pretty relatable. It provides a way to sell work that adds value to the original piece. It can also help sell things people may not have previously been able to sell like hot cakes such as digital sticker designs.

Another interesting feature NFTs have is that you can enable that will pay you a percentage every time the NFT is sold or changes hands. This way you’ll make sure that if your work gets super popular and balloons in value, you’ll still see some of that benefit.

Buyers вelight

Of course, a more obvious benefit of buying art with NTFs is that it lets you financially support artists you like. Once you get an NFT you usually get some basic usage rights, such as being able to post the image online or set it as your profile picture. Plus, of course, there are bragging rights that you own the art, with a blockchain entry to back it up.

Collectors Appeal

If you are interested in collecting then the NFT Boom is proving that they work like any other tradeable collectible speculative asset. You take a punt, invest in a piece, and probably hope that the value climbs before you or the heir to your looms die out, profiting a tidy sum for your or the family you leave behind.

Theoretically, it works because there have already been profitable resales.

NFT uniqueness…

Every NFT is a unique token in terms of its blockchain data. However, the idea that the image or video remains totally unique from piece to piece doesn’t necessarily have to be so. You could buy an NFT with an image like no other,  a one-off one definitive piece like when you buy a piece of old-school art or it could be more akin to a trading card where many copies are in print but all are uniquely numbered (digitally tagged with crypto data).

Who would pay such a large amount for what is essentially just a copy?

NFTs value is pretty difficult to judge currently opinion is divided and it’s a messy market. Some are convinced they will be the future of fine art collection for the elite to divulge in. Others really do see them as a virtual cardboard trading card. The latter of which is accessible to everyone, in terms of class or status, but the real value is anybody’s guess.

So it boils down to perception, is it a poignant piece on the megarich playground or akin to a Pokémon card.

Even the literal Pokemon card-inspired NFT’s seem to have their appeal. Logan Paul just sold some NFT video clips making a tidy $20,000 along with Logan Paul Pokémon card NFT’s.

Logan Paul image
You’ve activated my trap card (which sold for $17,000). Image by Logan Paul

But who is spending $20,000 on video clips of Logan Paul that you can access for nothing via YouTube? And more importantly why? Especially given the fact that Logan Paul could decide to sell copies of the very same footage as NFT’s as many times as he likes. Stop the world, it’s time to get off!

Logan Paul is not the only one jumping on the bandwagon. Linkin Park’s Mike Shinoda previously sold some song-based NFTs and gave the down-low on how NFT trade works in an article at inputmag. He notes the system could be a devil’s playground for “an opportunist crooked jerk.

Could this article potentially sell as an NFT?

Not really, but technically anything digital could be sold as an NFT. For instance, deadmau5 has sold digitally animated stickers while William Shatner has sold Shatner-themed trading cards (one of which was apparently an X-ray of his teeth).

Image by deadmau5
This one I like. Maybe not for $700, but… Image by deadmau5 and Mad Dog Jones

Some people are exploring the viability of connecting NFTs to real-world objects. It could be used as an airtight way to verify an object’s authenticity. Nike recently patented an NFT system named CryptoKicks. To authenticate the real-deal from a knock-off pair.

So terrifyingly we could well be in for a certified set of Shatner’s physical gnashers alongside a digital NFT x-ray. But, not just yet! No- seriously Mitchell checked and we are safe for now.

Where can you shop for NFT’s?

Right now, there are several marketplaces that have emerged around NFTs, which allow people to buy and sell. These include OpenSea, Rarible, and Grimes’ choice, Nifty Gateway, but there are also plenty of others.

Where do the kittens come into it?

As we said Ethereum blockchain is responsible for introducing NFTs as part of their new standard. And, inevitably as with all things internet, one of the first applications was for trading virtual kittens via a game called CryptoKitties.

Unsurprising, the average internet user has a bit of a penchant for purring felines. But none of us have quite as much love as the person who paid over $170,000 for their Cryptokitty.

Crypokitties
The face you make when you are worth $170K. Image: Cryptokitties.co

Really?

Yes, and yes we are just as flummoxed but that does say a thing or two about game-application for NFT’s. Venturebeat recently detailed a few games that are already including NFT items and given that even casual gamers are willing to spend real dough in a virtual store the idea of owning a unique in-game gun will probably have mass-appeal. People love to flex.

NFT Theft

The beauty of the NFT blockchain is a unique identity that makes it harder to steal. So there won’t be any point in planning a virtual museum heist- so to speak. Each time a transaction takes place, a record is stored but cryptocurrencies have been stolen in the past so there is still a potential for exploitation once people actually understand what the heck an NFT is!

But stealing isn’t cool you guys!

Should we be worried about the future of digital?

Physical art deteriorates over time and digital art is subject to Bit rot. The image quality goes down over time from sharing and compression changing of file formats etc. Some older formats don’t even open today, websites get taken down and removed and people forget their virtual wallet passwords. So NFT’s are not entirely fool-proof nor future-proof.

Can I buy NFTs with cryptocurrencies to maximize my blockchain use?

You probably can as right now there are a lot of markets that accept Ethereum. Yet, technically, anyone can sell an NFT, and they could ask for whatever currency they want.

Are the Ice-caps at risk if I trade too many kittens?

NFTs use the same blockchain technology as cryptocurrencies that can rack-up a lot of electrical leeching. Entrepreneurs are looking to lessen the impact that cryptocurrencies have on the climate and prevent global warming issues at the hands of crypto trading. So potentially, Logan Paul flogging himself in Pokemon form could do irreparable damage.

NFTs Storаge

NFTs are stored within a digital wallet like any other cryptocurrency the only difference being the wallet is specially designed to be NFT compatible. So you don’t need to build a super-safe to keep your priceless works of art in.

Sick of reading “NFT”?

Probably not as sick as we are of typing it! The popularity and rise of the new format are indisputable it will likely stick around and evolve tenfold, so you should probably just suck it up and get used to seeing those 3 letters from here on out.

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