Most of what you will read about NFTs focuses on how people with too much money are buying
worthless things using NFTs. Art that you can’t hang on your wall for $1.5m, the Nyan Cat meme for $590k, a video clip of LeBron James dunking for $200K, even Jack Dorsey’s first tweet for $10M.!
just like the discourse around Bitcoin, Blockchain, ICOs, and Defi, the focus is almost always on the hype and not on substance.
Enabled by the game-changing breakthrough of blockchain technology, NFTs are an innovative solution to severe problems plaguing the music, art, and content creation industries.
So what the heck are NFTs?
How do they work?
And why should you care?
STONE OR PLASTIC?!
What do you think of when you first hear ‘tokens’?! Do you think of round pieces of
metal or plastic?
Come with me to Yap islands, part of The Federated States of Micronesia, an island country in the western Pacific Ocean associated with the United States.
Up until the 20th century, native inhabitants of Yap islands used Yapese stone money.
Yapese stone money was made out of large stone disks called Rai, weighing over 8,000 pounds, and created from the limestone deposits of the nearby island of Palau.
Rai stones were not moved when spent but simply changed owners.
The small community kept track of the transactions orally, just like Arabs kept track of poetry, poets, and tribes.
One day a Rai stone sank into the ocean as it was being transferred on a canoe, but the community still used it as money even though no one could see it or had physical access.
The Rai was a token used as currency and the community kept an oral ledger of its transactions.
It may sound ridiculous today. Stones, not to mention immovable ones, are not money!
WHAT IS A DIGITAL TOKEN?
Until the last few decades, all tokens were physical tokens; however, we got digital tokens with the advent of technology.
A digital token is a unit of information exchanged between users or machines to facilitate and represent a real-world transaction.
The transaction can be anything from an online money transfer to subscribing to a service.
What about crypto tokens?
With the introduction of bitcoin and the rise of blockchain technology, we got crypto tokens.
Crypto tokens are digital tokens created using cryptography and exchanged exclusively on blockchain networks.
Crypto tokens usually represent a particular fungible or nonfungible asset or utility.
You may be thinking, Wait, what? Cryptography! Blockchain!
Am I supposed just to know what these are?! And what the hell does ‘fungible’
Ok, let’s break it down.
FUNGIBLE! WHAT’S THAT?
Fungibility refers to the interchangeability of a good or asset. Put simply, when something is fungible, it means every other thing like it has the same value.
Fungibility is a core property or money. Let’s say you have a 100 US dollar note. You probably don’t care if someone took it and gave you another 100 US dollar note in its place.
For you, it’s the same; it holds the same value. One may be a little worn out, crumbled, or someone decided to use it as a temporary notepad. It’s still a 100 US dollar note, and it has the same value. However, you wouldn’t feel the same if someone took your 100 US dollar note and gave you a Canadian 100 dollar note because they do not have the same value.
We can say US dollars are interchangeable and therefore fungible. However, US dollars and Canadian dollars are not interchangeable, therefore, not fungible.
On October 31, 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-peer Electronic Cash System was posted to a cryptography mailing list.
To many probably, this was just another attempt to suggest a solution to some of the technical challenges of using peer-to-peer distributed networks.
The paper described “a system for electronic transactions without relying on trust.”
A couple of months earlier, on August 18, 2008, the domain name bitcoin.org was registered.
The identity of Satoshi Nakamoto remains a mystery till today.
A pseudonym used by the person or persons who developed bitcoin.
After releasing the bitcoin white paper, he, she, or they created and deployed the bitcoin software on January 3, 2009.
The bitcoin network became a reality when people started to download and run the bitcoin software on their computers, and the first block of data was added to the chain.
WHAT IS BLOCKCHAIN?
Blockchain is a technology that enables the creation of decentralized networks of computers (nodes) that can securely exchange transactions without the need for a centralized authority (server or group of servers).
In a network like PayPal, a centralized authority (server or group of servers managed by
regulates, validates, verifies, and keeps a record of all transactions in a
PayPal executives or anyone in PayPal with the right admin access or power can choose to shut the services of PayPal at any moment, and you will lose access to any money you have in PayPal.
in addition to the ability to perform transactions using PayPal.
You are also limited to sending and receiving transactions to the countries that PayPal is willing to serve and people approved to have a PayPal account.
You pay what PayPal decides you should pay for transactions and exchange rates.
PayPal holds all the power; you are just a customer.
SO WHAT’S CRYPTOGRAPHY?
Cryptography is a method of protecting information and communications through codes so only the parties in that communication can read and process its information.
Cryptography in Bitcoin prevents any alteration or manipulation because it secures the transactions and blocks of data by complex mathematical algorithms that are extremely hard to break.
Simultaneously, cryptography makes it easy and fast to verify and validate Bitcoin transactions and blocks.
HOW DO WE GET CRYPTO TOKENS?
Tokenization is the process of converting rights to an asset into a digital token. cryptography-protected token tracked and traded on a regular basis The blockchain is a distributed ledger technology. Tokenization and piece creation information that is related to a fraction of the value of a real-world asset. can be completed without the use of a blockchain utilizing existing cryptography networks that are centralized.
In a blockchain-based system, the rules can be built into the blockchain software; it applies to everyone eliminating the need for a regulating body.
WHAT ARE THE DIFFERENT TYPES OF TOKENS?
Before we jump into NFTs, we need to explore the different types of crypto tokens.
Payment Tokens (Cryptocurrencies)
These are cryptographic assets that are native to a blockchain network and are designed to perform the functions of a currency, primarily as a medium of exchange and a store of value. The following are some of the most well-known Cryptocurrencies:
- Bitcoin Cash
Platform tokens are commonly associated with blockchain platforms that allow users to create decentralized applications, or Dapps. The following are some of the most well-known platform tokens:
- Ether (ETH) by Ethereum
- EOS by EOS.IO
- Lumens by Stellar
- BAT – Basic Attention Token
- GNT – Golem Network Token
- FUN – FunFairToken
WHAT ABOUT NFTS?
The difficulty with the NFT debate is the constant comparison of the real world to the digital/virtual world, as well as the overly simplistic statement that “buying art you can’t hang on your wall!” alludes to the absurdity of such a thing. So let’s break it down and clear up some common misunderstandings. re:
WTF are NFTs?
Crypto Collectibles, also known as NonFungible Tokens (NFTs), are a type of cryptocurrency token. Unlike fungible crypto tokens, however, each NFT is distinct, distinct from other NFTs, and cannot be duplicated.
what can we do with NFTs ?
NFTs are best known for their utility as collectibles, where users can keep digital assets assigned to their names and ownership is immutable
NFTs give players real ownership over in-game items. Gamers can monetize their efforts by actually owning (and even selling) the rare assets they earn in games.
Tokenization of event tickets prevents fraud (including fake tickets) and opens up new, decentralized markets for trading and reselling
co-founder of crypto kitties
Co-founder of Gods Unchained, one of the first games on the Ethereum blockchain
Co-founder of OpenSea, decentralized marketplace for crypto collectibles
Director of partnerships at stellar
Co-founder and CEO at lucid sight, the company that developed MLB crypto baseball
Co-founder of kenetic capital. Also the founder of the Ethereum HK meetup
tech lead at Decentraland, the first blockchain-enabled virtual world powered by cryptocurrency
Co-founder and Game Designer at Etheremon, one of the Top 5 NFTs in the token space
Partner at Blockchain capital and the General Partner of Blockchain capital’s venture funds a