WTF are NFTs
Have you ever bought a really expensive purse? I’m talking Gucci, Prada, Louis Vuitton. Have you ever noticed the little card inside verifying that it is in fact Louis? Here’s another example: When you buy a house or a car you get what's called a deed or a title. This is basically a document that proves ownership. Alright one more. Have you ever bought anything ever? You know the little receipt they give you that says yeah, I bought this on this day at this store?
An NFT is a digital deed or authentication certificate or receipt. That’s it. It’s quite simple. The idea behind them is actual pretty cool and without getting into the math too much, trying to fake an NFT is really really hard so having one is pretty good proof that whatever you are validating is the real deal.
Applications of NFTs have varied. Schools like McMaster University and MIT offer digital diplomas that are by any definition NFTs (Although you aren’t likely to find a Harvard degree on OpenSea anytime soon). The thing that most people think of when they hear NFTs is the widely popular NFT art.
After doing extensive research I can confidently tell you that NFT art makes absolutely no sense from a buyer standpoint. The idea behind it is simple I buy the NFT associated with this art and hope the value goes up. IT’s that simple. There are two very important things to note with NFT art:
- You DO NOT own the art (In most cases)
- It’s entirely speculative
As I mentioned before, an NFT is a receipt. While typically when you buy a pair of pants you and you alone can wear the pants, that’s not the same with NFT art. Due to the digital nature anyone with an internet connection can access the file. Foundation, one of the more popular NFT marketplaces, actually has a direct link to the files on all of their listings and there is the ever present Right-Click Save Technique. The NFT which sometimes goes for thousands, or millions of dollars gives you and you alone exclusive rights to sell the NFT. You are trading the right to sell NOT the actual art. In most cases the original creator retains the copyright for the image.
As for the speculation, in that way NFTs are too much different from traditional cryptocurrency investments or stocks. Save for some people that do sophisticated mathematical analysis, a lot of investment from ordinary folks is based on speculation about brands they like or hear about in the news a lot. The NFT market is not too different, with popular collections and their spinoffs, official or otherwise, sitting atop sales charts (Note #2, #4, #6 and #10).
From a creator standpoint, NFTs allow artists to monetize their art in a drastically different way from years past. Rather than going for high-volume low-cost print sales or trying to leverage apparel, an artist can instantly turn their art into a high value asset and be compensated for their skill and time.
That’s it, a quick rundown on NFTs that should hopefully let you understand the news next time they mention it or school your friends on what's going on. If you want to see what's happening in the NFT space, check out Open Sea, Foundation and Nifty Gateway to see some of the most popular NFT art at the moment. Cheers!