NFTs 101- Explained for Dummies
This time next year the term ‘NFT’ is going to be in your everyday vocabulary.
Watch this space…
And maybe… Just maybe…
NFTs might make you an extra stream of income where you can literally cut your day job, and do what you love as an artist or creator.
I want to cover a very basic introduction to this next aspect that will revolutionise the world.
Let’s start with the very basic…
What the HECK is an NFT?
An NFT is short for Non-Fungible-Token.
Non-fungible tokens are digital assets that represent a huge variety of unique, tangible and intangible items.
Let’s first break down the term fungible.
Fungible VS Non-fungible
If an item is fungible, it means that it can be substituted or exchanged for a similar item.
One bitcoin can be exchanged for another with the exact same value and features.
The only thing that is changed is a new record on the blockchain registering the transaction.
The sample applies with currencies and precious metals. Even if you crumple up a 1 dollar note, it is still worth 1 US dollar.
An item that is non-fungible is the opposite.
Non-fungible means, it is a unique digital item which you can’t exchange, replace for another or divide into smaller denominations.
They might have similar values, but they are completely different items.
Just about anything can be a digital asset including:
• Collectible cards
• Virtual real estate
• Digital characters
• Digital art
• And even clothing
Now I’m sure you’re thinking…
Can’t people just screenshot or copy the image and call it theirs?
Why you can’t just screen shot an NFT
Let me ask you something.
Can you go to the Louvre, take a photo of the Mona Lisa and call it yours?
No… Your photo will have no value. This is because it doesn’t have the provenance or the history of the work.
And we can trace back, where the painting is at any one time.
It is very similar to NFTs
When you create, buy, exchange or sell an NFT – every item can be traced back to the original issuer. And the digital coding, behind the NFT, makes it indisputably verifiable.
Not only that. With crypto-art, with the processes, you’ll also be able to receive royalties each time your digital art is sold.
And so, anyone can buy a digital print, but only one person can own it.
But the question we’ll need to ask is.
What gives an NFT value?
Like all assets, there is one main driver for the value.
Supply and demand.
When there is high demand and low supply, more buyers flood the market driving the price up.
For example, Elton John selling a one-of-a-kind digital Baseball card.
When there is less demand and high supply, then less buyers or no buyers will drive the price.
For example, trying to sell a digital photo of the breakfast you had today.
Ok so we have five factors that drive up demand and price, with NFTs.
3. Features and functions
5. Perceived value
Next week we’ll get into examples on some profitable NFTs and even how a South African is banking over $4,000 a month with selling these NFTs…
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