Non-Fungible Tokens (NFTs) are in the news a lot lately. Headlines about Beeple selling his NFT for 69 Million draw a lot of attention, which is why every major news outlet covered it.
By now even your parents or grandparents may be asking you “What the F*&#@( is an NFT?”
Discussing NFTs with your family is bound to go one of two ways. Either they won’t have any clue what you are talking about, or they will think it’s a pyramid scheme.
So we decided to come up with some practical ways that you can explain to your family the basic concepts of NFTs, as well as their importance.
When you explain that an NFT is a digital asset stored on the blockchain, the person you’re explaining this to will likely ask “What’s a blockchain?”
The simplest way to explain this is that it is a computer network that acts as a distributed ledger, that stores information. Due to the fact that it is distributed it is highly resistant to tampering.
An NFT is a financial security consisting of digital data stored in a blockchain. The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded.
NFTs often contain a reference to a digital file such as a photo, video, digital render, or audio, to name a few. Because NFTs are uniquely identifiable assets, they differ from cryptocurrencies, which are fungible.
A good way to understand the concept of ‘Non-fungible’ is to understand the concept of ‘fungible,’ an asset that is easily replaced by another. For example, our money is fungible, any 5-dollar bill is worth the same as another, and can be replaced with any other 5-dollar bill.
So essentially, non-fungible is the opposite of ‘fungible.’ One Bored Ape NFT could be traded for a CryptoPunk NFT, but it is not really possible to say they are easily interchangeable or of the exact same value.
The process of minting an NFT is when someone creates a tokenized version of an asset. Most people use an existing online platform, that easily facilitates the creation of an NFT.
Our own co-founder and lead 3D artist, Stacie Ant, has minted a few of her own images on Foundation, a marketplace for NFTs. She also created an entire generative NFT collection for Sādu, which can be found on OpenSea, another marketplace for NFTs.
The intrinsic value of NFT technology is that it makes the trading of unique assets incorruptible and frictionless. NFTs have given power back to artists and creators.
“That’s why NFTs are important for consumers – they know they’re buying the real thing. For the producers, they are more exciting still. The information economy hasn’t been kind to artists – musicians and photographers seeing their work shared and copied for free. Even when pieces are bought, the big money is sucked up by gatekeepers such as Spotify or Amazon. What if there were a way for artists to cut out the middlemen, to seamlessly get their works to the customers, and get the rewards? Digital art, marketed online as NFTs, is that way.” ~according to Culture Trip.
As with any new technology, the list of use cases for NFTs is still growing and will continue to grow for a long time. We can only imagine the impact they will have on many aspects of our lives, not just in creative fields. For example, maybe the next time you buy a ticket to a concert or a membership to an online service, it will be an NFT that acts as an access token.
So by now, hopefully, you will have some tools on how to explain NFTs to your family, or some other inquisitive person. Obviously, we could not go into extensive detail since this is a beginner guide, but we hope that helped.