What in the ‘F’ are NFTs? You may have heard this term floating around recently, and you’re wondering what all the fuss is about. Non-fungible tokens, or NFTs for short, are digital assets that differ from one another. They can represent items, such as art pieces, video game characters – even real estate!
Because of their uniqueness, they have become increasingly popular over the past year, and many believe that they could be the future of art and asset collection. This article explores everything there is to know about these tokens. It should answer some of your burning questions and help you understand this new and stimulating digital art form. Stay tuned because, at the end of this article, you may just want to purchase your first NFT!
So, what exactly are non-fungible tokens?
I’ve found myself shrugging shoulders at the term far too many times, so let’s look at things in a little more detail. NFTs are unique digital assets that can’t be replicated (this is actually a huge part of their appeal and can add serious value to each creation). You’d be forgiven for thinking they were new, but they’re not, and their origins can be traced back to early video games such as CryptoKitties and Second Life.
In these games, NFTs represented in-game items or characters. More recently, NFTs have become increasingly popular as a form of digital art. This is primarily due to the release of platforms such as VeVe, which allow users to create, sell and buy a whole host of impressive artworks in a range of fandom genres.
There’s mention of cryptocurrency; where does that come into play?
You’ll often find these two in the same sentence, and there’s a good reason for this! Cryptocurrency is the perfect way to trade and store NFTs. In fact, it was a cryptocurrency that first allowed for the trading of NFTs in a secure and trusted manner. This is because cryptocurrency uses blockchain technology, which allows for the creation of digital assets that are tamper-proof and protected.
Cryptocurrencies, such as Bitcoin and Ethereum, are digital currencies that use cryptography to secure transactions. These currencies control the creation of new units. NFTs can be made using various cryptocurrencies, but Ethereum is by far the most popular choice. This is because Ethereum encourages the use of smart contracts, which are digital agreements that automatically enforce contract terms. As time moves on, other blockchains create their own secure way to support NFT creation – check out this announcement of TRON’s first integration of NFTs (TRC-721).
Ok, mind blown. How do NFTs actually work?
Now that we know more about these new-age tokens, let’s look at how they actually work. When you build an NFT, you are creating a digital asset. This asset is stored on a blockchain, a reliable ledger shared by all users on the network. When you pay for an NFT with cryptocurrency, the transaction is recorded on the blockchain and ownership is transferred to your crypto wallet. Simple, right? Hmmm.
The most intriguing part of all this is traceability. When you create an NFT, you’re given a unique digital identifier known as an NFT ID. This ID is used to track the ownership of your NFT through the blockchain ledger or wallet. Every transaction and change in ownership are logged, which creates a record. These records are visible to anyone with access to the blockchain, which means that transactions involving your NFTs can be traced at any time!
I think I’ve got it, but why are they so popular?
There are a few reasons for this! Firstly, they’re wonderfully unique, which means each has its own individual value. Secondly, they’re easy to trade and can be exchanged for other cryptocurrencies or items of value. And finally, they make perfect digital art pieces, profile pictures, even gig tickets, and can be used to represent real-world items or concepts. This makes them an incredibly versatile and exciting form of digital asset.
What makes an NFT unique and how can I be the only owner?
The answer to this is simple – cryptography! NFTs are created using hashing algorithms, which have the capacity to create unique strings of numbers and letters. When an NFT ID is assigned at creation, it is unlikely that another NFT will be created with the same ID as yours (1 in 10¹² to be exact). You own your NFT because you own the private key to the public key that corresponds with its unique identifier, and no one else.
Hold on, isn’t this just a digitised version of collecting Pokémon cards?
Some people might say so, but there are some key differences from traditional card collecting. As mentioned above, NFTs can be used to represent real-world items or concepts. In contrast, Pokémon cards are limited to in-game characters and items. Let’s not forget that NFTs can be traded for other cryptocurrencies or commodities of value, whereas Pokémon cards can’t. But yes, we get what you’re saying *wink*. Plus, nothing quite beats the feeling of discovering that coveted shiny!
I have so many questions… why are they so expensive? And why does the resell value only get higher?
This is a difficult question to answer, as the price of NFTs can vary dramatically from one to the next. However, NFTs can be challenging to come by. Limited numbers play a part, in the same way as real-world art. And with each asset being one-of-a-kind, they’re usually in high demand from collectors. The key is to spot new trends before they become mainstream and desirable.
Sounds familiar, right? It’s a lot like the stock exchange and physical art world. Spotting trends before they peak to make the most significant financial gain. But if gains aren’t your thing, treat the items for what they are. And purchase based on your personal taste. After all, once bought – it’s yours. And only yours!
So, what’s the most expensive NFT sold to date?
Cast your minds back to October last year (2021). What were you up to? Working out. Working on a project. Working on song lyrics. Working on your stream content? October was probably the most expensive month on the calendar for one individual. The person in question set aside $69 million at a Christie’s auction to purchase a piece by Beeple’s Everydays — a collage of digital art. There is some speculation behind this outlandish purchase, though. Check out this article to find out more!
Can I create an NFT, and will it be popular?
The short answer is yes! And plenty of people out there, just like you, have done exactly that. Ideally, you’d have some coding knowledge and a good understanding of the industry but there’s nothing stopping you. As for how popular it could be. That’s down to you. What you create, its desirability and how you publish it to the world. If you’ve already got some concepts, we say go for it!
Earlier, you mentioned that NFTs appear in games?
We did, you’re right! NFTs are often used in video games to represent items or characters that exist within the game. This can make for an interesting and interactive gaming experience for users. For example, in the game CryptoKitties, players can collect and trade digital cats using NFTs. And let’s face it, cats are pretty funny!
So, we’re likely to see more NFTs in-game moving forward?
There’s no doubt about it! NFTs, offer game developers a way to create memorable and attractive gaming experiences for their users. NFTs within games help to create a more immersive and engaging gaming experience. As the popularity of NFTs continues to grow, we can expect to see more games using this innovative technology. Who says it stops there? We see no reason why these art pieces wouldn’t become commonplace among streaming assets. Avatars, emotes and much more!
What else can we expect to see in the world of gaming?
It’s fair to say that we can expect to see more games using blockchain technology in future years. This will allow developers to create games powered by NFTs and offer users a more immersive and engaging gaming experience. Additionally, we can expect to see more games making use of VR technology. This will allow players to enter into a virtual world and interact with digital assets within the game. Exciting times lay ahead for gamers the world over!
Ok, so can’t everything digital be sold as an NFT then?
That would, of course, depend on the type of digital asset being created. Generally speaking, if something can be represented digitally, it can be turned into an NFT. This list might include images, videos, music and even websites. However, not all digital assets are created equal, and some may be more suited to this format than others. For example, an image or video might be a better option over a website, as the latter is more complex and difficult to store and track.
I think I’d like to see an example of these incredible artworks; where should I look?
There are a few places to check out! Firstly, there’s the platform VeVe. This is a great place to start if you’re new to NFT’s and want to get a feel for the art form. They keep everything in-house, on the platform and is widely considered as a safe space for those looking to buy, sell or trade. They’ve also worked with some of the biggest brands out there – Disney, Marvel and DC – so you know you’re in good hands!
You can also browse through the listings on OpenSea, a popular marketplace for digital assets, featuring artworks from well-known collections like the Bored Ape Yacht Club, Azuki and CryptoPunks. With its HUGE catalogue, OpenSea hails as the biggest marketplace for NFTs in 2022.
Is there a community for this type of digital art?
You’d better believe there is! In fact, there are hundreds of communities out there that focus solely on NFTs. These communities offer a place for collectors to come together, share their collections and discuss all things non-fungible. They’re also a great place to find new and interesting NFTs to add to your collection.
Ever heard of CryptoPunks, Pudgy Penguins or the Bored Ape Yacht Club? They all have incredible communities that take to Discord and Twitter to share memes and topical conversations surrounding their quirky assets. Are you already a proud member of a like-minded community?
People are on board with the new art form then?
We couldn’t possibly speak for everyone, but it certainly seems that most people we asked feel optimistic about NFTs. Is this because they offer an intriguing and modernised way to collect and trade assets? It’s highly likely! In fact, the social giant’s Twitter recently patched an update allowing users a way to upload assets as their profile pics. Progression is underway; however, some naysayers will feel there’s nothing to gain with this new fad. What do you think?
Twitter has just introduced NFT to profiles, tell us more?
Correct! Twitter recently launched an update allowing its users to upload NFTs as profile pictures. Many expect this new feature will help bring more attention and notoriety to NFT’s in general. We’re also expecting Twitter to form their own community, allowing users to share artworks and other digital assets with one another. This is a huge step in the journey of NFTs and we would expect other platforms to join the ranks very soon!
I’m interested, but how do I know I can trust the validity of a particular NFT?
This is a great question and one that’s often asked by collectors. Firstly, take a look at the track record of an artist or creator. Suppose they have a history of releasing high quality and legitimate assets. In that case, you can be more confident in their work. Secondly, check out the community that’s built up around the artworks. Are they supportive and reputable? If so, then it’s likely that the NFT is on the up and up. Finally, always do your own research! Take the time to read up on an asset and make sure you’re comfortable with it before purchasing.
Wow, so there’s a lot to think about regarding NFTs!
Yes, there certainly is. However, this is what makes the art form so engrossing and fun! With so many different options available, there’s something for everyone. So don’t be afraid to experiment and find the NFTs that speak to you. Who knows, you might just find your new favourite form of art!
What about Beyond? Will you ever create NFTs for your audience?
We at Beyond are definitely open to the idea and are currently exploring ways to do this. However, it’s still early days at this stage, and we’re not sure what form this will take. We’ll be sure to keep you updated as we progress. If it’s something you’d be interested in seeing, Tweet us in the usual place!
If you are thinking of getting involved, here are a few tips on what to look out for when entering the world of NFTs…
- Ensure that the NFT is unique and has a value that you’re happy with
- Do your research! Make sure you are comfortable with the asset before purchasing
- Be aware of scam artists and avoid any suspicious NFTs. There are too many instances of crypto theft observed on platforms like Twitter, Instagram and Reddit. Don’t fall trap, instead use confirmed sites, known within the industry
- Join a supportive and reputable community of collectors to get started
- Check to see if the NFT is stored on a reputable blockchain
- Avoid connecting your crypto wallet to unconfirmed links or websites
- Make sure that you have a secure way to store your NFTs
- Always use a reputable and secure cryptocurrency exchange when trading NFTs
- Have fun! NFTs are all about exploration and experimentation. So go out and find the ones that speak to you!
What are some common mistakes when sourcing NFT content?
- Not checking the legitimacy of the blockchain
- Leave your wallet connected to a platform. You wouldn’t leave your front door open, would you?
- Not understanding how NFTs work
- Trading NFTs on an unsecured or unknown exchange
- Not verifying the authenticity of an NFT
We hope you’ve enjoyed this foray into the world of NFTs. Are they worth investing in? That depends on what you want to use them for and who you are as a collector. They hold a lot of promise for the future, especially when it comes to gaming and digital art.
Do we think they’re going away any time soon? Absolutely not. But we would love to hear your thoughts on them – do you find them exciting or intimidating? Let us know! And be sure to keep an eye out for our next episode, where we explore some of the most popular artworks available on the market!
Disclaimer: This blog article is not intended to provide any form of financial advice. The contents of this blog are a result of research, please do your own before purchasing NFTs.