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What Is NFT: The Ultimate Dumb Down Version

NFTs are the new kardashians always seeking attention from the media and in social network. So what is the fuzz all about?

WTF IS NFT: secondlastpage.com
WTF IS NFT: secondlastpage.com

Now I am sure you looked online on what NFTs really are only to get bombarded with buzzwords you either don’t understand or have the time or interest to look into it. This article is different, we are going to simplify the Cryptocurrency and NFT buzzwords so that anyone even the grandpapa reading will understand. 

Why should you care about NFTs?

So, First, let’s ask why should you care about NFTs in the first place? Look at this tweet 

What is NFT? secondlastpage.com

This is allegedly the first tweet ever made in the history of Twitter. The guy was probably testing out this platform but recently this simple tweet was somehow being sold for an astounding $2,915,835.47. 

Let’s take another example 

A single jpeg file that looks like some kid on weed drawing on a canvas, managed to sell — for wait for it— $ 69,346,250. NBA is selling short clips of basketball games for millions of dollars and everyone from athletes to even who makes memes are chasing on the NFT bandwagon. 

Remember the disaster girl meme? This one sold for 2.9 million 

What is NFTs? Secondlastpage.com

So, people are buying these digital assets for real money but why? Why are they buying it and what is the purpose of it because the normal folks like you and me can share the same picture online or print them on the wall if we wish so why is this so expensive?

To understand it we have to understand what NFT is. 

WTF is NFT

NFT stands for Non-Fungible Token. The word non-fungible means something you can not exchange, a synonym for non-fungible can be written as non-replaceable, NFT simply means a non-replaceable item. Let me give you a demo: 

NFT example: secondlastpage.com

This is a plane ticket which cost me around couple of hundred dollars when I got them in 1998. You can now pick the same ticket from any airlines for a similar price. This is an example of a fungible item. An item that can be replaced easily and can be interchangeable. 

However, let’s take this particular ticket as an example, to me these tickets right here has special significance because it was my first time traveling on a plane. . This has been with me for a long time and I have grown an emotional attachment to it and although it is disintegrating and may not have any monetary value to you, it’s quite special to me. This particular ticket exists only at one piece that I am holding it right now and sure you can buy a similar-looking ticket but not this exact one. This is therefore, an example of non-fungible item also known as NFTs. 

But this still does not explain why they are so expensive and why will anyone in their right frame of mind will be interested to spend so much money on them.

To understand that, we have to take a step back and ask ourselves how we perceive something as valuable. In a world where resources are scarce, anything in short supply is deemed valuable to us. For example, diamond and coal are both elements of carbon and one can argue coal serves more purpose than a diamond as you can use it as fuel which diamond can not be used, but diamond is way more expensive because of its rarity. 

NFT offers that same feeling of exclusivity and is therefore deemed so expensive. Take the first tweet as an example, that first tweet is done and there will never be another tweet that you can call the first tweet so being able to digitally own that piece of history gives individuals a sense of exclusivity and hence the enormous price you are paying. We, humans, want to be special and unique, and being able to own a piece of history or even a funny meme like the disaster girl gives us a sense of fulfilment having the ownership of something iconic and being able to call it mine. 

How does NFT work

Now that we have established the reasons for the perceived value each NFT has, let’s now learn how it actually works after all unlike traditional art pieces NFT is no real product. So, being a digital product it is very important to establish an effective system to define the true ownership of an NFT and that is where blockchain technology comes in.

I know you have been trying to avoid understanding blockchain but please be with me. A blockchain at its simplest form is like a big stone where you write each and every transaction that has been made. So for example you bought an NFT, this purchase will require you to pay a certain amount in cryptocurrency. The amount will be deducted from your account and added to the account of the NFT sell and on the big rock, all transactions will be written, including the fact that you have paid for the NFT and now own the product. 

So, blockchain is like a huge stone where each and every transaction made is visible and everyone has access to this stone so everyone can see that you have purchased the NFT.

Blockchain is immune to manipulation as everyone has access to the big stone and everyone in the group has to validate that yes this transaction has been made, any attempt to tamper with the stone will be flagged as you personally have to go to each people and change the copy of the stone they have which is almost impossible. This transparency of everything being visible is what makes blockchain so secure and many believe this is the future of currency. 

Btw the big stone we have been referring to is called a ledger so if you have heard that term and been wondering what the hell is that, now you know. 

What next on NFT?

NFT is a great way of having ownership of the digital product and the technology that it is built on ( blockchain ) is here to stay. We, humans, crave recognition, and having NFT gives us just that with everyone knowing the perceived value each token has in the offer. 

But, there is a huge but and that is we currently are in an NFT bubble that is waiting to burst. People have associated NFT with everything and I have seen people investing in it without knowing if this will hold value in the future. You can buy an ape NFT now for upwards of 20,000 dollars but what is the perceived value in it? Why do you think in 2 years’ time people will still be interested in this pixelated NFT? So, understand what you are investing in and how the NFT you are interested in will still be relevant in the future, for example, the first tweet, this is a part of history and as long as Twitter is there people will cherish the NFT so look for exclusivity and uniqueness before investing in any NFT. 

If you are interested in checking out some promising NFTs that’s revamping the market, read our article at Top 10 BAYC ( Bored Ape Yacht Club) Like NFTs Waiting To Be Discovered. See you all on the other side. 

These articles require extensive research to gather all the facts to provide something that is truly useful for you. If you find it interesting or valuable, show us some love by buying us a coffee 😊 It sure helps us financially as we give you an ad-free experience

1 Comment

1 Comment

  1. Dsd

    February 13, 2020 at 10:14 am

    Cchgfd

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