WTF? NFT: Non-fungible tokens
Sam & Shaan are talking about it, GaryVee is on it, some YouTuber Logan Paul as well. It’s the new hit next too crypto, sports cards and Pokémon. NFTs are non-fungible tokens, art on the blockchain, also called digital collectables. NFTs are another form of digital assets.
Where fungible tokens, e.g. a bitcoin, can be exchanged for another, e.g. another bitcoin, non-fungible tokens can not, they are unique. There is only one of each. And one does not have the same value as the other.
The NFL’s NBA Top Shots – the most traded NFTs right now with $13.5 million in the last 24 hours as we speak – sells traded “moments”. Just like normal sport packs, you don’t know what’s in them when you buy these sport decks. They all have video clips of basketball plays with animations when you open them, when you’re lucky you have a unique player in a unique moment that will make that piece unique and valuable.
Cryptokitties, a hit dating from somewhere back in 2018, are an example of NFTs. Digital kittens traded on the blockchain. Tamagotchis on the stereoids. They are now traded for $37 million in 24 hours as we speak. Yes we are still talking about digital kittens.
Of course now you ask: Where can I buy a NFT?
- NiftyGateways has a curated selection with only high profile artists. You do not need crypt to buy their digital art. A credit card will suffice.
- OpenSea.io: this is more like the E-bay for NFTs, you can find all types of digital art on here. You’ll need to do your own curation. People sell and resell on this platform.
Do you own crypto if you buy NFTs?
No, you spend crypto to acquire them. Once you have a NFT, you have digital art that lives on the blockchain.
Why sell NFTs?
Opposed to physical art, where an artist sells it piece for a price and if his/her piece is good enough it’ll be sold, resold, auctioned off etc. And the artist will never see any returns from those sales.
Having your art on the blockchain, will record all of the NFTs activities. Who it’s sold to, sold from, for which amount, at what dates etc. Opposed to physical art, with NFTs the artist will also receive a paid part every time their piece is traded again. Robin Hood of the digital arts galore.
Where everything is abundant on the internet right now, which is especially frustrating for artists out there, NFTs can help make your work scare. Nike-fying your art.
Why buy NFTs?
- Portfolio investment diversification
- Survival of the internet fittest
- It can be lucrative: Shaan had it’s NBA NFT go up in value from $800 to $8000 (10x) in 20 days, it can be a lucrative investment if you have money to play with and time to deep-dive
- Christie’s is selling NFTs and accepting Ether
- Chamath invests in them and is dropping $$$$$$$ on them (this video on Chamath made an impression me, in one word? Ballsy. And “Why The Fuck Not”.)
What’s the opportunity of NFTs?
- As an artist
- be paid fairly for your work
- create hype around your work
- As a business
- Marketplaces to showcase NFTs (there are only 2 “real” marketplaces right now)
- Sell shovels during a gold rush: offer “frames” to showcase your newly acquired NFTs (Shaan and Sam discuss you can easily sell them for $300-$400 and gain $5 mill sales with it)(they look a bit like these InfiniteObjects frames, but then should have the technology to change out the NFTs you trade)
- As an investor
- Lucrative investment gains if you know your NFT game (10x-100x your investment in days/months)
- As a a consumer
- Some nifty “art” you can hang in your house and that is Gen-Z-proof
Why don’t I just right-click the images and save NFTs on my computer?
Why is the Mona Lisa in the Louvre? 🧐
Why does this 1955 Bowman Mickey Mantle sports card sell for $5.2 million 🤷🏻♀️
Are NFTs the new ICOs?
It’s a craze, a hype a bubble right now. Some cards are ridiculously priced, so in that way: Yes. You can participate and there are some lucrative gains to be reaped. But NFTs value is nowhere near Bitcoin’s with its trading market between $5-$20 billion right now. Bitcoin is a financial asset and that entire’s industry is worth trillions.
Opposed to ICOs, companies on the blockchain, NFTs have made blockchain accessible but mostly understandable to the public. People understand sports, they understand players and the value of players and specific sports moments. They’re tied back to emotions. NFTs are not the next Bitcoin, but are a cool way to make things on the internet scarce.
So are NFTs the new ICOs?
Yes, as in they are a bubble and 90% of them are overpriced and won’t exist anymore in 5 years from now. But doesn’t that account for all art out there? No, as they are more accessible to the audience, tapping into familiarity and emotions, something people can visualise and “feel”, giving the NFTs already a higher use case than most ICOs. It’s a nice way to create value on the internet for art.
Update 5 April 2021: Tim Ferris, Vitalik Buterin & Naval
Shortly after I wrote the above post, Tim Ferris broadcasted an interview with Ethereum Founder Vitalik (whenever I think of Vitalik, my mind immediately surfaces this image of him. Funnily, his unicorn-cat shirt add to his “legit-ness” in my mind?) and almighty lord of Wisdom, Naval Ravikant.
It’s a good listen, but you’ll need some focus to comprehend the gist. What I remembered from the podcast, and what made Bitcoin vs Ethereum a bit easier to understand:
- Vitalik: Ethereum is a Spreadsheet with macros whereas Bitcoin is “just a spreadsheet” where you can only control your little piece on the spreadsheet (whereas Ethereum’s code can make different pieces interact with each other, ultimately giving you more possibility to operate).
- The limit for what you build is your own creativity.
- Vitalik’s one sentence exploitation for Etheruem: it’s a general-purpose blockchain. Ethereum expands on the Bitcoin approach: instead of one application (a shared ledger), it’s more general-purpose and people can build their own applications and execute and implement them on the Ethereum platform.
- Once you build the application, the application won’t depend on you or someone else to run. And it will run based on the rules that were specified from the start.
- Bitcoin is a shared ledger, Ethereum is a shared computer over the world with shared applications.
Ethereum is going through the roof: NTFs are built on Ethereum. And then this week I heard about Bitclout, where you invest in people. It’s Twitter x RobinHood: you invest in people’s reputation and their ‘clout’. and I wrote a little blog post about it here “The Hype Cycle named BitClout”.
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