What is NFT?
0x223A
March 28th, 2022
https://mymodernmet.com/what-is-nft-crypto-art/
https://mymodernmet.com/what-is-nft-crypto-art/

Disclaimer: I am still leaner in this industry. The concepts and articles I produced are based on my own understanding and should not be viewed as any sort of financial advice.

Intro — What is “Non-Fungible”?

To understand NFT, we first need to understand its name. The full name of NFT is “ Non-fungible Token.” What does this mean? What is fungible or non-fungible?

To answer what is fungible, let’ take an example. there is an exchange rate between the Chinese Yuan and the US dollar. At the moment, the rate is 6.38, meaning if I have one US dollar, I equivalently have 6.38 Chinese Yuan or I can swap the amount of US dollar I have based on this ratio. This concept featuring mutually interchangeable, items or commodities that can be exchanged with other assets, is called fungible.

Thus, What is non-fungible? If I have a Chinese cup and a US spoon, can I determine their exchange ratio or say how many these cups are valued equivalently to how many these spoons? Probably not. Additionally, the price of cups and spoons fluctuates over time based on market demand and supply. This concept featuring a unique identifier that can not be substituted or subdivided is called non-fungible.

**Part I: **Art — copyright protection and ownerships

When the non-fungible concepts are mixed with arts, it helps the arts become unique identifiers. Turning arts into NFTs can benefit both the creators and buyers. Somebody might ask, how can digital arts be more efficient than physical artwork? I can just right-click the image, save it, and make copyright?

This is the exact issue digital art has but blockchain solves it perfectly. With blockchain technology, each NFT has a unique token ID. When the producer creates an NFT, their NFT is linked to their wallet address. The creator wallet address is often transparent and can be viewed either on secondary NFT marketplaces or analytical websites like Ether-scan, etc. In such a way, each NFT can be verified from their related creator wallet address and their copycats will not be able to steal the talents from creators. Thus, the concept of NFT helps creators worry less about pirated works.

From the NFT buyers’ perspective, in addition to being able to purchase the verified artwork, buyers can directly interact with the creators and gain ownership of a piece of the artwork. The concept of ownership is a very unconventional idea, especially for art.

By having ownership,

  1. The buyer now owns a piece of work produced directly from the artist they favored and now their wallet address is indicated on-chain as the current owner of this NFT. This presents an immediate connection between the artists and the buyer.
  2. The buyer is able to publicly display the art they own. Since it can both publicly be viewed on the blockchain (searching address) or from the secondary market page.
https://opensea.io/assets/0x8a90cab2b38dba80c64b7734e58ee1db38b8992e/316
https://opensea.io/assets/0x8a90cab2b38dba80c64b7734e58ee1db38b8992e/316

What if someone download my image, put on as their profile picture, and claim they own the image?

This should not be a concern at all. I believe this person is purely advertising your item for you since you are the real owner of this piece and all records are trackable on chain.

Part II: Utility — A ticket to exclusive memberships

Most people define NFT as art and believe its value should mainly come from the way how the image look or the artist behind the image. However, as the industry grows and people become more creative, not all the projects are valued on their aesthetic value. Take a look at the example below:

https://opensea.io/collection/veefriends
https://opensea.io/collection/veefriends

This is a collection made by Garyvee. The art is OK but we can not say it is amazing. However, this collection is being loved by people and the price floor remains at a high point (8 ETH). What makes this project unique is the utilities behind this picture. By owning some of the NFTs, you are able to become a part of the Veefreinds’ community, getting the opportunity to have a call with Garyvee, access to some of the real-life events hosted by Gary, and many more. Thus, I believe, instead of being defined as arts, NFTs should be defined as tickets to exclusive memberships. One of the benefits of this membership is having access to the community, often through a discord channel.

CommunityCommunity is a very important aspect of the NFT world. As an investor, you always want to surround yourself with long-term thinkers who act calm and have visions instead of short-turn flippers who read the market with emotions. Additional to investing advice, in a community you can also exchange living experiences, make jokes, chat about anything, and become close friends with others. Garyvee himself will also randomly jump into the discord channel and chat with the NFT holders. All of these relationships are sparked by the affiliation of owning the same NFT and being in the same community.

TokensAside from the cultural aspect, some NFTs projects can help you generate passive income, meaning you can earn tokens by holding some NFTs.

*Due to the policy of the Opensea, all of the tokens below will be stated to have no financial value and can only be used within the projects’ ecosystem.

One example is a project called CyberKongz, by owning one genesis Kongz holder is able to receive 10 $BANANA tokens a day. The $BANANA tokens can be used in its ecosystem for breeding baby Kongz and act as Governance tokens.

https://www.cyberkongz.com/banana
https://www.cyberkongz.com/banana

The price of $BANANA is currently trading at $38 and had a peak of 118 in October. The token can be swapped on Sushiswap or Uniswap into other tokens. If we do the math correctly, by holding one genesis Kongz producing ten bananas a day, the person can earn a passive income of around 138K/ year, and, in October, this number was 427K/year. Pretty crazy right?

https://www.coingecko.com/en/coins/banana
https://www.coingecko.com/en/coins/banana

LaunchpadAside from the token aspects, projects are getting more and more creative. One of my favorite projects is called The Doge Pound. One of the team’s selling points is granting holders early access to projects through their launchpad. Launchpad provides people a spot in the whitelist and, by getting whitelisted, holders can purchase the NFTs before it goes on the secondary market. Normally, when the projects go to the secondary market its price will often appreciate and sometimes achieve a 3–5x from the minting price. At this time, you can either choose to hold or sell. If you have the privilege to mint three sets at the whitelisting price, often you can sell one set to cover the mint price and gas. In this scenario, you equivalently get the other two sets for free and can do whatever you want with them.

https://discord.com/invite/6xEq5wxR6M
https://discord.com/invite/6xEq5wxR6M

By joining the launchpad and getting early into other projects, it minimizes the risks of getting into bad projects while maximizing the amount of profit you can make. This strategy can help you generate stable returns and promise passive income.

Part III: Trend — Mass Adoption incoming

If you have been on Twitter recently, you definitely have learned some face-melting news. A large number of celebrities and big brands start moving into the NFT space. The most evident example is the Bored Ape Yacht Club.

Since August, big celebrities such as Stephen Curry, Jimmy Fallon, Mark Cuban, Snoop Dog, The Chainsmoker, and many more have purchased a bored ape and joined the club. Recently Adidas also joined the community and changed their Twitter profile picture to a bored ape. Timberland launches production company for bored ape NFTs owners and Universal Forms Metaverse Band Based on Bored Ape Yacht Club NFTs.

Today, in Times Square in New York, various NFT projects are also displayed on many billboards, which are seen by millions of people every day.

Left: Cool Cats NFT; Right: Galatic Gecko
Left: Cool Cats NFT; Right: Galatic Gecko

Epilogue: A new ear of the change

With the rapid development of the metaverse concept and Web 3.0, it is believed that in the near future, people will gradually start and become accustomed to using their virtual 3D identities to socialize online. NFT has opened up a space full of infinite reverie for the application scenarios of Web 3.

On the economic front, as the U.S. government continues to release water, the depreciation of the dollar has led more and more people to look for another form of preservation of their assets. The NFT craze gradually started, and people began to gradually convert their fiat into “jpegs”. This behavior has brought a high-speed boost to the development of the NFT market and attracted unimaginable attention.

2022 will be a year full of reverie. As major exchanges launch NFT markets, Coinbase, the largest exchange in the United States, will launch their NFT markets at the end of December, and Robinhood and Reddit will also join this revolution next year to promote the start of Web 3 applications.

Finally, let’s hand over the decision to time, wait patiently and embrace this new era of change.

Thank you for reading!

**
The article was originally posted in Dec 5, 2021 on Medium

View the article in Chinese:

Arweave TX
3Lmh8h9gCcx9vQ7BMyp2Mjd0TKBVWcnqWcBwmwC0uMY
Ethereum Address
0x223A91b67a58bF70C0AD820b710f73BD2C19998d
Content Digest
zkV7g-3zFcpacncLyJID52WdTJQ5vVDGHWTwmI8XiD0