Remember this meme? Now it has an owner. The girl in the photo - Zoe Roth - sold a meme with her face on NFT for $470,000.
Well, didn't you wait?
Another example: the game CryptoKitties sells virtual cryptokitties as NFTs. Each cat has its own unique number, 256-bit DNA and its own characteristics: color, eye, presence of clothes, etc.
What is this mysterious abbreviation, how to make money on NFT, or big risks - we will tell in our article.
What is NFT in simple words?
NFT (Non-fungible token) is an irreplaceable token that is "tied" to a single object, this object can be: a photo, a picture, a GIF, a video, a music track, a character in a game, etc. digital content.
In simple words, an NFT is a unique token, it is like a digital record in the blockchain registry that gives you the rights to own a unique object in the digital space. It is the same as a record in the EDRN about the ownership of an apartment. This document is stored in the user's crypto wallet, just like any other cryptocurrency.
It's difficult so far. Show examples of NFT?
Any unique object can be converted into an NFT. And it doesn't matter whether it's the Mona Lisa or a painting by an unknown Petryk Pyatochkin, the technology is the same. But of course, no one particularly needs Petrykov's drawing: only a couple of his friends may be interested in it, but this is not accurate. Therefore, objects that have value are usually transferred to NFT, otherwise there is simply no point.
Let's talk about examples.
- A Dota 2 player bought a rare pink dog that brings in-game items for $38,000.
- Linkin Park lead singer Mike Shinoda created an NFT from his music and sold it for $30,000.
- A Pokemon fan bought a Pikachu trading card NFT for $250,000.
- Twitter CEO Jack Dorsey sold his first tweet (Twitter post) in NFT for $2.5 million.
- Banksy's painting “Morons (White)” was bought for $100,000 and transferred to NFT. And then they burned... Of course they burned, but the picture ceased to exist only in physical embodiment! It lives digitally, its token has an owner.
- The most expensive NFT - the "Daily: First 5000 Days" collage was sold for more than $69 million!
Hmmm... And the copyright also passed to the buyers?
No, they bought only the token itself and certain rights to it, which are fixed in the contract, but did not become the authors of the object. The pink dog still belongs to Dota 2, Mike Shinoda remains the author of his songs, and Jack Dorsey remains his tweeter. The exception is when the copyright is transferred together with the sale of the NFT and this is reflected in the contract.
Usually, buyers get limited rights: for example, the owner of the pink dog NFT can use it in the game, the owner of the NFT Mike Shinoda can listen to the tracks until he is blue, the owner of the NFT tweet can post it on the Internet, for example, on his page in the social network. They can also sell their tokens to other people.
Wait, but all this can be found on the Internet for free!
Reproductions of paintings can also be viewed on the Internet, but collectors still buy the originals. The same goes for NFTs: if you buy, for example, a token of a famous meme, it will still continue to roam the Internet, but you will be its actual owner. It is a matter of prestige and belonging to the art: many people like to own the original.
What if I'm an ordinary person? Why do I need NFT?
Ordinary users should hardly consider NFT as an investment field. But, of course, if you really want to, you can.
NFT is mostly needed by creative people: musicians, artists, authors of unique photos, website developers to digitize their works, secure copyright and protect themselves from data theft. But also earn money from your creativity.
Also, NFTs are needed by art connoisseurs, collectors — everyone who is important to have unique objects, even if in digital form. Considering the amount for which NFTs are bought, collectors do not spare money.
Let's say I'm an author. How to create and sell NFT?
- Start a crypto wallet in the Ethereum system.
- Register on platforms that work with NFT: OpenSea, Rarible, Mintable. On these platforms, you can create NFT and sell it. These are virtual marketplace.
- Create your collection there.
- Create a file with a digital object: photo, video, audio, etc.
- Add it to your collection.
- Click the Create button.
That's it, your token is created! It remains to wait for verification, press the "Sell" button and wait for buyers to be interested in them. When the purchase takes place, the money will be sent to your wallet.
Let's say I'm a collector. How do I buy NFTs?
We also open a wallet, go to the above sites and choose tokens.
You can buy NFT at the declared price, you can participate in the auction. In the first case, the money will be immediately debited from your crypto wallet, in the second - also if your bid is the highest. The principle is the same as in a regular auction.
Different platforms have different rules and commissions for both sellers and buyers. We will not go into detail in this article.
Are there risks to NFTs? How serious?
But this is a painful question. In short, there are serious ones.
- To buy and sell tokens, you need to first pump the theoretical base: understand all this cryptocurrency and blockchain. Actually, this applies to any kind of promotion.
- Cryptocurrency has its own rate, which is characterized by increased volatility. This also needs to be understood in order to distinguish halving from halva.
- NFTs are not yet regulated by law, and this scares many. Ownership of tokens is not regulated by law, i.e. the owner has no legal rights.
- In the absence of legal regulation, financial regulators can determine the status of NFTs as securities. In recent news, the US Securities and Exchange Commission has just begun investigating the NFT market for securities law violations.
If I take the risk, what will happen to NFT next year?
Experts name the main trends:
- An even greater output of NFT into the non-virtual space. Irreplaceable tokens will be popular in the niches of virtual real estate, tickets, even clothing and accessories.
- NFT as a pass to places "not for everyone". For example, there are already tokens with the image of monkeys, which are a kind of pass to a closed yacht club.
- Increasing sales of NFTs in the sports market — transactions are forecast to exceed $2 billion. Players' cards will be sold and bought, as well as video clips of sports events.
- Increase sales of fan tokens.
- The increase in the value of NFTs in the past years. For example, the 2017-2018 CryptoPunks project became very popular in 2021.
