WTF are NFTs?!
I created this thing to document my journey into NFTs. I’ve only been in the space since November 2021. But 4 months in the space is literally 4 years because it moves so fast! I’ve managed to do relatively okay so far but honestly, a lot was due to beginner’s luck.
I’m also writing about stuff I’m doing because it helps me process it better. And I want to share this with others including friends and family who have increasingly started to ask me about it. They’ve heard of NFTs selling for millions in the news and are curious but don’t know WTF they are! I’ll use common phrases/acronyms that are common in the NFT space and define these as I go along. Soon enough you’ll be an NFT pro :)
Disclaimer: I’m definitely no expert — no one is (especially anyone who says they’re an NFT expert (this is a red flag!))- please always ‘DYOR’ (do your own research).
NFTs explained simply
So I’m going to assume you don’t get NFTs. That’s cool. Skip ahead if you do!
Very simply, they’re digital assets that you own. This could be an image (like those Bored Apes you might have seen — Justin Bieber recently bought one for $470k!). Or a membership pass (like to an exclusive club — e.g. popular influencer Gary Vee has NFTs which give you access to his annual conference VeeCon which has famous speakers like Mila Kunis, Liam Payne and of course Gary himself).
It could even be something as simple as a coffee subscription (see Bored Ape Coffee Club — which gives you monthly ground coffee from independent shops). Not a fan of this one though — it’s very overpriced.
They have taken off because you can verify your ownership on the blockchain. Which in basic terms, is a public thing that verifies you as the owner and is not meant to be hackable. In the future our driver’s licences, house ownership documents, university certificates (Yale is already doing this!) are predicted to be NFTs. So all we’ll need to do is prove we own it by sharing our ‘Wallet address’ (which is where your NFTs are held).
NFTs will probably remove a lot of stuff lawyers do too. Because they use ‘smart contracts’ which is a new technology in ‘Web 3’. So currently most of us use ‘Web 2’ — which is stuff like Facebook and Instagram where companies own your content and data. Web 3 is the next step, this is where you as the creator or participator own your data and content and therefore can make money from it, rather than the majority going to gatekeeper platforms like YouTube.
So a Smart Contract works by itself via the blockchain without human interference. So if you want to buy an NFT, you select purchase and the smart contract moves ownership from the seller to you. It’s quite groundbreaking. A good use case would be a Web 3 Uber. You as a passenger would use an app to order a Taxi, and this would use smart contracts to connect a driver without any ‘middlemen’ (i.e. Uber the company in this case). This would cut costs significantly and ideally mean trips are a lot cheaper. Obviously, it probably won’t be as easy as that and I’m sure humans will still be needed to an extent.
Hopefully this helps TLDR NFTs. And by the way, they might be called Digital Assets in future because this is what some platforms are starting to call them and says what it is on the tin!
Another use case is for video games. You could buy in-game items e.g. a car (Web 3 loves Lambos!) and use it in say Grand Theft Auto. Then you can move the Lambo to another racing game or even into a ‘Metaverse’. Because it’s your asset.
By the way. The Metaverse is stuff like ‘the Sandbox’. More on this in future. But to TLDR — this is a virtual world where you have avatars and can roam around like The Sims but it has real world use cases.
So for example, the NFT project Women Rise is currently building a school in the Metaverse for disadvantaged kids like girls in Pakistan so that they can get a real education from home because some of them can’t go to school. Women Rise is actually one of my favourite projects and has recently donated a large amount to the Malala Fund. The stuff they are doing is groundbreaking and I don’t think it would have ever been possible without NFTs! Please note this is not financial advice (NFA) to buy this NFT — as always please DYOR.
NFTs are unique. They stand for ‘Non-Fungible Tokens’ which means each one is different. So if you have 1 dollar and give me that for 1 dollar in return— they’re worth the same and there’s nothing difference about them. But if you have an NFT, it will have its own characteristics and is completely unique from all other NFTs.
Now NFTs are the future in my opinion. It feels to me like when online stores like eBay started 20 years ago. And the mainstream media was like why would people buy stuff online, especially clothes? But now all the big in real life (IRL) clothing stores are closing and online has taken over. I think NFTs will do the same. And it’s already happening guys.
But you need to be careful. As the space is exploding, a lot of ‘bad actors’ are coming into the space. They create ‘rug’ projects which means they’ll sell NFTs and then run away with the money and not progress on what they had planned to do.
So you need to be careful before buying an NFT. And not ‘degen’ in (which means buy something because it’s going up in price/ looks cool without any research). They are also highly illiquid which means you might struggle to sell them depending on which collection you buy. This means you need to do thorough research before buying. And have conviction. So if it suddenly it crashes you’re not going to panic sell for a loss. It’s not easy. But it’s worth it in my opinion. You’re early if you’re reading this and it’s good to be ahead of trends.
Not only is there a lot of money to be made in NFTs, but also you get to be part of amazing communities. This can lead to growing your network, business opportunities, friends and more more.
The NFT community is one of the most friendliest I’ve ever met. Everyone says gm (good morning) to each other :) Most people are helpful.
There are a lot of scammers though (I will write an article on this in future). So it’s good to take it slow. Scammers take advantage of greed and impatience. As sometimes cool NFTs will release to buy and you have to be quick to ‘mint’ (buy) it or they will sell out.
Scammers will send fake announcements by hacking the places where the relevant links are sent. It’s better to lose out by taking it slow than rushing and being scammed! Because if you click a scam link, they could take out all your current NFTs or cryptocurrency like Bitcoin that you may hold.
Overall though NFTs are worth researching. And I’m hoping my blog can help. I’ll also go through what I think are ‘blue chip’ projects — which are long term profitable projects with amazing communities. And my decision making process from learning from others and my mistakes so far. I’ll also chat about upcoming projects I’m bullish (very confident) on and experts I like to follow (but not blind follow!).
Hope you enjoyed this post. WAGMI (‘We’re all gunna make it’)!.