What Are Art NFTs And Why You Might Care
In this post you will be introduced to some key concepts about NFTs including:
What is an NFT
Why they have value
Why you might want to be involved in purchasing, trading or creating some
Why you may want to buy mine eventually
This is the first in a series of blog posts I'll be making on the topic and I'll be doing it from the vantage point of being an NFT (pronounced "en off tee" or sometimes "nifty") explorer and creator. It stands for Non-Fungible Token which is a new way to think of digital originals or one-of-a-kind items.
NFT Definition:
A non-fungible token (NFT) is a unique and non-interchangeable unit of data stored on a blockchain, a form of digital ledger.
-wikipedia
Some Background On NFTs
Beeple's $69,000,000 jpg
Thanks to the $69M sale of Beeple's (Mike Winkleman) "EveryDays" jpg to crypto billionaire Vignesh Sundaresan through Christie's venerable art auction house last March the concept of NFTs as something to invest in has been entering the mainstream. There's all sorts of buzz surrounding the viability of these "non-fungible tokens" as something other than the super confusing ponzi scheme you might think it is on first glance.
CryptoPunks And Bored Apes Yacht Club
That's the sale that brought NFTs to we non-geeks' attention, but they've been creating buzz within nerd communities for a couple of years already. Right now you can purchase funky little pixilated icons of what looks like a pretty old school avatars called a CryptoPunks for usually between $350,000 - $500,000 US. Huh? Why?? And why did a set recently sell for $532,000,000? Quickie explanation is these 10,000 icons were generated by Artificial Intelligence and are considered the first ever NFTs. The perceived value goes up pretty much any time anyone else's NFT sells. Because they were first and, you know, AI 'created' them and that's kind of a first too.
Same too with the Bored Apes Yacht Club. They were also introduced as a collection of 10,000 and their sales prices have been going through the roof lately too. Why? Pioneer participants and a lot of online marketing.
Dumb Investment - Crazy Ponzi Scheme Junk?
I hear you. The NFT market in its current state has all the signs, doesn't it?
Right now, things are both expanding and settling down in the world of NFT sales. And by right now I mean today, Monday January 8, 2022. Could go bonkers again tomorrow! May even be doing so right now. Or next week. Or by the summer....
Several reason they're talking about the instability of the current NFT market::
The market is becoming flooded with wanna-be's (**slowly raises hand)
Lots of junk schemes and false promises are confusing everyone
and in places the bubble never got blown up enough to even burst
But if you've ever followed the rise and fall of various cryptocurrencies or the stock market, then you have an idea how normal this is to a market like this.
Despite A Rollercoaster Start, NFTs Are Here To Stay
How can I be certain? Because they offer:
A way for artists to form exchange relationships directly with their collectors (not just in sales but in connection, conversation, idea sharing, etc.)
There are so many ways NFTs can become part of our lives!
Creators who connect with integrity, authenticity and sincerely with their followers and collectors are helping create a safe and lucrative environment for people to buy and sell NFTs in ways pure speculators eventually fail at. We are who will legitimize and normalize all aspects of the concept of NFTs and make them safe to invest in and give them places in your life that meaningful and satisfying for you the collector! In fact, we do this as a team, you and me.
Fungible and Non-fungible
But wait, I'm getting ahead of myself. That's typical when it comes to explaining aspects of NFTs. It's a mesh of new information. Let's start closer to the beginning so you have a better chance of acquiring a working knowledge of these ideas.
What Does Fungible Mean?
Fungible means something that can stand in for or replace something else one to one. A hundred dollar bill in fungible. If I owe you a hundred bucks you don't care which of the zillions of $100 bills in circulation I hand you. You also don't care if I send it as a number to your PayPal account. The concept of the value of $100 can be represented a few interchangeable ways, or it is fungible. The exact thing I send doesn't matter, but the VALUE of it does.
So, What Does Non-Fungible Mean?
Non-fungible means that the thing we're talking about, in this case Beeple's $69M jpg, is one-of-a-kind. A one-off. An "original" if you will. But how can a digital collage be an original? For one thing it's composed of images Mike has posted all over his social media, for another, Christie's (the auction house that sold "Everyday") posted the collage all over their online outlets prior to the auction, too. Even the individual images that compose this digital collage are semi-famous and available all over the internet already. So what kind of moron would buy a version for almost $70M? (hint: perceived value and scarcity)
Fungible items are all the posters for sale in the Louvre's gift store of the Mona Lisa. One is as good as the other. Another fungible version of Miss Mona's painting would be knock-offs, greeting cards, woven blankets and counterfeit versions. Only THE one painting, painted by Leonardo DiCaprio himself is the non-fungible version of this piece. Hahaha, just seeing if you're paying attention. I meant Leo DaVinci of course.
So What Makes A Digital File Non-Fungible?
I mean, after all, it is the nature of the digital world to be able to be duplicated with one keystroke, several if you want to file it somewhere you can find it again. You're thinking: "Easily copying files is a hallmark of the digital age". So right. That's why it's taken so long to come up with a way to create digital files that can be thought of and, more importantly, permanently identified as original, unique or otherwise one-of-a-kind. It's kind of counter-intuitive in the whole computing field where information is shared as freely as possibly all throughout the land to think of any digital asset as being unique, one of a kind or non-fungible.
Why Is This Happening Now?
In order for there to be a way for digital assets to be identified as non-fungible (non-replaceable) it took two main aspects of current networking capabilities to happen. Both new features of file identification that make it statistically and practically impossible to pirate or counterfeit.Fairly recently clever folks created two file sharing protocols somewhat concurrently:
Having an interconnected and very decentralized way of disassembling and reassembling digital assets and their related keys (passwords and other identifiers)
and having a network of systems always ready to create the super complicated transactional keys used to interact with (open, move or otherwise goof off with) a digital asset.
These are the hallmark aspects of the blockchain computing cryptocurrencies rely on. It's how they work.
In the case of NFTs, they are minted to the blockchain where the file can be linked to a token that identifies it in perpetuity as the 'original' version of this digital asset. I see your eyes glazing over. Stay with me.
That clears it up, right?
Of course not!
There's so much new lingo to absorb and new concepts to take in. Let's start with examples.
What Are Examples Of NFTs?
New ways to mint and use NFTs are coming online all the time, but let's start with some current basics.
image files
moving images
videos
songs
other audio files
movie shorts
animations
3-D renders of objects
digital trading cards
video clips of famous moments in sports
real estate in the physical world
real estate in the metaverse
items to use in online games
in-person experiences
tickets to events
other real-time I've experiences
and more coming online every day!
What Does Minting an NFT Mean?
Basically it means offering it for sale with all the correct identifiers.
In the 'minting' process, the digital asset (picture, video, song, etc) gets uploaded to an NFT marketplace. When you post it for sale you do that by connecting the digital asset's file it to your Crypto Wallet. Most NFT marketplaces began by using Ethereum Crypto Currency because ETH allows for those Smart Contracts that give the file its unique identifier, it's a token that stays with the file.
The actual process can go like this:
an artist creates a piece and digitizes it. Of course it may have started out as a digital drawing, but it could be a digital photo of an existing canvas painting.
she uploads it to the her account on the marketplace (Opensea, Rarible, Foundation, etc.)
she connects it to her crypto wallet (MetaMask is super safe and popular for this)
she finishes the minting process by assigning a price (usually shown in fractions of Ethereum) and paying the gas fee (the price she has to pay to get the computations for the pieces token onto the blockchain) to get a token created for the piece from the blockchain
How To Buy An NFT
To Buy An NFT is a similar process to minting one, but in reverse.
Log in to you account on the NFT marketplace
Connect to your crypto wallet (MetaMask runs as an application on Chrome and other popular browsers)
Bid on or buy the NFT you want (some NFTs are offered as auctions, some you can instantly buy)
When you have finished your purchase, the NFT and its smart contract will go from my wallet into your wallet.
You will have several options to download or otherwise display use your new NFT which I'll be talking a lot about in the near future and as new ways to them come online throughout 2022! Some of these will include physical assets that are 'unlocked' when you purchase the digital asset. Things like maybe a display screen, a private video call, and other attractive incentives meant to personal your experience with a particular NFT.
I've got a lot more to share to help you understand this fast evolving world, including clear directions on how to set yourself up to collect NFTs and what to do with those. I'll post that in a couple of days.
Here is my first ever minted NFT. It's an subtely animated digital painting called "Generate Joy". It's available on Opensea for .15 ETH here.
Depending on how my sales eventually go, this rare first offering should increase in value as we go. And, by the way, I am in this for the long haul. I see a fantastic future for such art offerings and want to continue to play a role in helping at least part of the coming metaverse be a welcoming, beautiful place.