What is an NFT?
NFTs, also known as 'Non-Fungible Tokens', are unique digital assets that are stored on the blockchain. They can be bought or sold, but not replicated.
NFTs are created or “minted” from digital objects that represent both tangible and intangible items. These assets could be anything from art, music, tickets, items, collectibles, and even your Web3 domain name.
Physical money and cryptocurrencies are “fungible”, meaning they can be traded or exchanged for one another. Simply put, if you can exchange something with another thing that holds the same value, then it's a fungible token.
Eg: Your $1 bill has the same value as my $1 bill. They're designed to be equivalent and interchangeable.
NFTs are different because each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another. Simply put, an asset becomes non-fungible when it's unique and can't be replaced by something else. You can sell it, but you can't replace it.
Eg: Beyoncé signed a poster just for you. Need we say more?
While knowing what NFTs are is great, it’s just as important to know what they are NOT!
If we're talking about NFT art, you get proof of ownership of that specific artwork. However, you don't necessarily get its copyright for printing on t-shirts. The artist can still retain the copyright and reproduction rights, just like with physical artwork. Also, anyone can see the art in your wallet.
So if you buy a Crypto Coven witch today, that witch would live in your wallet and would give you access to any worlds they have or will be building down the road. You can also list the witch for sale at any time for any price you state, but only the creators have the copyright over it.
Like cryptocurrencies, NFTs are traded on specific platforms. You’ll need to decide which marketplace to buy from, what type of digital wallet is required to store it, and what kind of cryptocurrency you’ll need to complete the sale.
Some popular marketplaces are:
OpenSea: This is a peer-to-peer platform of “rare digital items and collectibles”. All you need to get started is to create an account and browse NFT collections.
Foundation: An invitation from fellow creators is needed for artists to join and post their art.
Zora: An NFT marketplace protocol creating the most gas-efficient and feature-rich on-chain marketplace in Ethereum.
Rarible: Similar to OpenSea, Rarible is an open marketplace allowing artists to create and sell NFTs. RARI tokens are issued to enable holders to weigh in on the platform’s features like fees and community rules.
Once bought or sold, it's stored in the new owner's wallet.
Anyone can buy, sell, or create NFTs. The creation of NFTs is called a "mint", which means creating a smart contract that will be stored on the blockchain. The smart contract contains important information including listing the creator of the work and ensuring that the creator receives royalties each time the NFT is sold.
Projects can give early minting access to people in their community. This is often referred to as “allowlists” or “pre-mint spots”.
You can do whatever you want. In principle, you can download a copy of a digital file for free, including the art that’s included with an NFT. BUT "right-click-saving" an NFT doesn't give you the rights to buy & sell it nor have verified ownership of the original piece.
To put it in terms of physical art collection: anyone can buy a poster or print of the Mona Lisa, but there’s only one original painting, and a copy isn’t the same as the painting itself.
Music ownership has historically been limited to industry players, but music NFTs are creating accessibility for artists to release and fund their work and for fans to be a part of this journey.
Royal allows fans to invest in artists, own their favorite music, and claim royalties.
Sound.xyz is building Web3 tools for artists driven by the relationship between artists and listeners. Users can support artists by staking a claim in their work.
Virtual land is a unique, fixed plot of land in the Metaverse, and owning a piece of Metaverse land is becoming a new trend. Real estate is divided into parcels and these parcels are NFTs that you can collect, buy, or sell.
Decentraland explores land owned by users on the blockchain which community members can craft and create into anything they imagine.
In-game NFTs allow players to monetize their virtual experiences on the blockchain, including purchasing, selling, and swapping items on the marketplace.
Axie Infinity is a virtual world of pets that can be battled, collected, and used to earn crypto in the real world.
The Sandbox is a virtual gaming world that allows players to build, own, and monetize their gaming experience. Players can build the platform they’ve always envisioned.
We're seeing new use-cases for NFTs arise every day beyond art. Communities are being built around NFT projects, giving holders value over and above simple ownership.
Art is just the gateway to a lot more things NFTs can unlock in the future. As we move into a more digital world, having a verifiable and foolproof way to have ownership of digital assets is key.
The tech behind NFTs is relatively new and far from perfect and may still be concerning to many. But there are thousands of people working hard to make it better each day.