Welcome back to our learning blog series – Building Blocks!
Within these blogs we aim to explore and explain concepts across the digital space. By doing so in ways that are familiar and relatable, we hope to make blockchain technology easier for everyone to understand.
Today we’re diving into the world of NFTs!
The TL;DR
- NFT stands for Non-Fungible Token - a unique and irreplaceble digital assets.
- There are a variety of different NFTs, such as collectibles, gaming, art and more!
- NFTs can be collected and displayed, just like you would with a physical collection.
- NFT ownership rights can confer different benefits - always check what rights are granted with your purchase.
What is an NFT?
NFT stands for Non-Fungible Token. They are unique digital assets that cannot be replicated and like cryptocurrency are stored on the blockchain. NFTs act as a certificate of ownership for the asset they represent.
How do NFTs work?
The key to NFTs is the NF. Non-fungible.
Fungible = replaceable or interchangeable. If you have a mint condition Shiny Charizard, your card can be exchanged for another mint condition Shiny Charizard and it would be worth the same.
Non-Fungible = Unique and not replaceable by something of equal value. Let’s say now that your Shiny Charizard is signed by Mitsuhiro Arita. It’s now a unique piece that can’t be replaced by another Shiny Charizard card.
Just like cryptocurrency, NFTs and their ownership are recorded and maintained on the blockchain.
What types of NFTs are there?
Currently there are three main uses for NFTs: Collectibles, Art and Gaming.
Collectibles
Pop Vinyls, Sideshow statues, Pokemon cards. People collect items from a specific collection in the physical space because they like the style, the brand or the content. Some collections have pieces that are one of a kind, others have multiple releases that are numbered.
Collectable NFTs operate on the same principle. You collect NFTs from a collection that has a style that you vibe with. Like in the physical world, you can display these NFTs to show others what you’ve collected. A common way of displaying them is to use them as a PFP (Profile Picture) on your social media network of choice.
Some collectable NFTs go beyond simple something to display and offer you access to exclusive gathers and events. One of the most well-known NFT clubs is Bored Ape Yacht Club.
One of the first collections of NFTs – Cryptopunks – was free and only required you to pay gas fees and have a wallet to claim them. Some have since sold for over $20 million USD.
Art
Digital artists and photographers use NFTs as a way to monetize their art. By turning the original piece into an NFT it can be sold as a one of kind collectable. The art can be a one off, or part of a series.
Incredibly popular pieces will sometimes be released in numbered limited editions. Like a limited run of an Iron Man Sideshow statue, each NFT is listed as a specific number out of the full run.
Through the use of these NFTs artists can also choose to include a certain level of ownership rights over the piece.
The first NFT was created in 2014. It was a digital art piece called “Quantum” by artist Kevin McCoy that was minted on the Namecoin blockchain.
Gaming
Game studios use NFTs to reward players for in-game accomplishments with items that have real world value. This play to earn model allows for gamers to see real world gains for their time spent in the digital space.
NFTs are also used for items like character skins, gear, land plots and more. Games generally sell items like this in limited release windows, but NFTs allow you to sell that item months or years after it’s no longer directly available and the value has risen significantly.
While the majority of gaming NFT implementation is with indie developers, one AAA studio is making an effort to be at the forefront of NFTs in mainstream gaming. Ubisoft launched Ubisoft Quartz in December 2021, a place where the studio can drop limited Digits for its most popular titles.
The world’s first NFT game was the wildly popular CryptoKitties on the Etherum blockchain. Each kitty had a unique set of traits and could be bred with another kitty to product new NFTs with traits from its lineage.
More uses for NFTs are surfacing all the time. Things like Homebase DAO are offering real estate NFTs. Some artists are creating NFTs from their songs to allow their fans to support them. Sites like Mirror allow bloggers to give their readers the option to mint NFTs from their posts.
What does NFT ownership mean?
NFT ownership rights can vary depending on the collection you’ve purchased from.
Original art and photography – Artists will sometimes sell their work as an NFT and it may come with licensing rights, just like if you bought a license from a stock photography or art site, giving you ownership to use the asset however you like. If you sell the NFT, the rights go with it, and you can no longer distribute anything featuring that work.
Replicas/Prints – Like a museum shop will sell reproductions of a painting like the Mona Lisa, you’ll find NFTs that represent replicas of a famous artwork. Owning the NFT gives you ownership of the replica, but not any rights to distribute copies. You simply own that specific numbered NFT, just like you would own a numbered print of the Mona Lisa. You can sell off the replica/print without issue to a new buyer.
Music – Some artists will offer NFTs of songs. In some cases, these are simply limited editions of a specific song. Other times the NFT may come with full recording rights to the track.
These are simply a few examples. It’s always a good idea to find out what sort of ownership rights are granted before you purchase an NFT.
Where can I purchase and trade NFTs?
NFTs have their own marketplaces where you can buy, sell and trade your NFTs. OpenSea or Rarible are some of the most popular to trade your NFTs, but a variety of marketplaces exist.
Once you’ve purchased your NFTs they're stored in a wallet, just like crypto. Apps like Wonder Wallet offer an easy to use set up for storing those NFTs, whether for long-term holding or to trade and collect as often as you’d like!
Wrap Up
NFTs are a type of digital asset that represent ownership of a unique item or piece of content. Created using blockchain technology, they are unique and that can't be replaced with something else.
They can be used for anything from digital artwork and music to virtual real estate or collectibles. The blockchain verifies the authenticity and ownership of the NFT, making it valuable as a one-of-a-kind item. NFTs represent the next level in collectibles for everyone to enjoy!
Don't forget to follow us on X or hop into Discord for all the latest news and updates, and we’ll see you in the next Building Blocks where we’ll tackle Cryptocurrency!