What are NFTs?
NFT stands for Non Fungible Token. Sounds complicated but all it really is, is a picture (or a gif or a video or a song) that lives on the internet — at this point think back to the last thing you saw on Instagram and that’s it… a picture … on the internet. However, there is only one owner of that picture, and just like any physical item in your house, it can be bought and sold… if there’s someone willing to buy it.
A more formal definition:
Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type i.e. bitcoin and other altcoins are fungible — if I have 1 bitcoin and you have 1 bitcoin we can swap them and we will both still have 1 bitcoin, with both of them worth ~ $50,000. Hence, Non Fungible Tokens means that each token is unique, so if you exchange your NFT with someone else’s you have a completely different asset with a completely different value.
If you’ve been involved in crypto you may be used to seeing coins (BTC, ETH, ADA) referred to as tokens, however “token” in NFTs represent the unique piece of digital art.
The reason we can say that there is only one verifiable owner is that with blockchain technology, there is a ledger which acts similarly to the logbook of a car. This is a game changer because previously there has been very little governance surrounding digital content — i.e. a song on a phone can be sent around to multiple people, the same applies to a picture on your phone. Although people can still save and share your NFTs, it enables people to know that they are buying the original version of an art piece. The same way that we have the original Mona Lisa which is worth millions and we have replicas which are worth peanuts, we now have the equivalent for digital content.
The same way that we have the original Mona Lisa which is worth millions and we have replicas which are worth peanuts, we now have the equivalent for digital content.
This opens up a whole new category of collectibles. We’re used to seeing people who collect rare trainers, clothing, cards and paintings and now we have digital collectibles. Not only do we have a new category of collectibles, but NFTs are disrupting the way any valuable item is owned. Here’s an interesting twitter thread on all the other possible sectors that NFTs could disrupt: CroissantEth’s twitter thread
Some key words worth remembering:
Non-Fungible Tokens (NFTs) — unique, digital items with blockchain-managed ownership.
Ethereum — Ethereum is a blockchain, and ETH is the currency used to make transactions on the Ethereum blockchain
Gas fees — transaction costs to use the Ethereum blockchain. Most NFTs live on the Ethereum blockchain but some NFTs are available on other blockchains such as Solana, Avalanche and Binance Smart Chain
Crypto wallet — A crypto wallet is an application or hardware device that allows individuals to store and retrieve digital assets
Collection — a body of work, like a store or gallery. Think of it like an album and the NFT you’re buying is an individual song from the album
Mint — Minting an NFT is the process of turning digital art into a part of the Ethereum blockchain as a public ledger. Minting an NFT from a collection is essentially the very first purchase of that NFT
Rarity — Refers to how rare an NFT is within a collection. Rarer NFTs within a collection usually have a defining feature that makes it stand out from the rest, which will typically mean it is worth more $$$
Floor — the lowest priced NFT in a collection
Purchasing an NFT
So now you’ve come across a collection that you like and you want to make a purchase. What you need to do is head to their official collection on Opensea, Beware of scams and fake projects mimicking the real thing (this is often the case with very popular projects) it can easily be avoided by following links from official social media pages (most common would be twitter, discord and telegram).
Once you’re on the artists Opensea page you can see all of the NFTs available and the prices. Note: if you’re early enough you can mint the NFT directly from the artists website.
What you’ll need to do is connect your metamask, then create a profile (very straightforward — all you need is to create a username, email and password) and you’re good to start buying NFTs.
Metamask is a cryptocurrency wallet, that enables you to store coins and NFTs, if you haven’t got one yet see the guide below to set one up:
The last thing you need to make sure of before you start buying is that you have money to buy the NFT. Most NFTs are purchased with Ethereum. So simply head to whatever exchange you use to buy cryptocurrencies (e.g. Binance, Coinbase etc…) buy some Eth and send it over to your Metamask wallet and you’re good to go.
There are other NFT marketplaces, like Rarible, SuperRare etc, all of which have the exact same process… connect your Metamask and start purchasing.
The origins of NFTs
Recently, you may have seen some NFTs selling for ridiculous amounts, like the punk below which sold for 2,250 ETH (~$6.75mn). Most of these projects came to life in 2017 and set the scene for one of the most interesting use cases for NFTs… art on the blockchain. Art is a word that is open to a lot of interpretation, when people say art they could mean anything from a classical Mozart orchestra to a slugfest between to heavyweight boxers. This can be seen across NFTs as you have some extremely detailed pieces which look like a lot of time and effort has gone into them and then you have NFTs like CryptoPunks which just look effortless. Regardless, of the amount of effort both will still command outrageous fees.
OG 2017 projects worth knowing about:
CryptoPunks:
A collection of 10,000 8-bit style pixel cartoon-like characters
Mint Price: Free
Current Floor: 111 ETH ($330,000)
Highest Sale : 4200 ETH ($7.58m) — CryptoPunk #3100
Twitter : https://twitter.com/larvalabs?s=20
Website: https://larvalabs.com/cryptopunks
Etherrocks
“Virtual rocks which serve NO PURPOSE beyond being able to be brought and sold, and giving you a strong sense of pride in being an owner of 1 of the only 100 rocks in the game” — Etherrock Website
Mint Price: 0.01–10ETH
Current Floor: 800ETH ($2.1mn)
Highest Sale: 888 ETH ($2.9mn) — EtherRock #27
Twitter: https://twitter.com/EtherRock?s=20
Website: https://etherrock.com/
Cryptokitties
Cryptokitties is a game centred around breedable and collectible digital kittens
Mint Price: 0.01 ETH
Current Floor: 0.01 ETH
Highest Sale: 600 ETH ($171,000) — Dragon
Twitter: https://twitter.com/cryptokitties
Website: https://www.cryptokitties.co/
Mooncats
A collectible NFT project where 25,344 8-bit style pixel cats need to be rescued from the moon by minting them from the Mooncats website or buying them and holding them in your Ethereum wallet.
Mint Price: Free
Current Floor: 0.91 ETH (~$2700)
Highest Sale: 160ETH (~$524,000) — Mooncat #527
Twitter: https://twitter.com/ponderware
Website: https://mooncatrescue.com/
Recent projects that have attracted a lot of attention:
Hashmasks
Hashmasks is a digital art collectible created by over 70 artists globally. It is a collection of 16,384 unique digital portraits.
Mint Price: 0.1 ETH — 100 ETH — most were available at 0.1 ETH
Current Floor: 1.3 ETH
Highest Sale: 420 ETH ($635,000) — Hashmask #9939
Twitter: https://twitter.com/TheHashmasks
Website: https://www.thehashmasks.com/
NBA Top Shots
A collection of digital trading cards where each card features a video highlight of an iconic NBA moment.
Mint Price: $9-$230
Current Floor: $3
Highest Sale: $230,000
Twitter: https://twitter.com/nbatopshot
Website: https://nbatopshot.com/
The NFT that sold for $230,000: https://twitter.com/nbatopshot/status/1432141089679478785?s=20
BAYC — Bored Ape Yatch Club
A limited NFT collection where the token itself doubles as your membership to a “swamp club for apes”. The club enables access to special features on their website including the ability to contribute to art in their digital bathroom — have a scroll through their website for more details of the club.
Mint Price: 0.08 ETH
Current Floor: 25 ETH
Highest Sale: 600ETH ($2.3mn) — Bored Ape #7090
Twitter: https://twitter.com/BoredApeYC?s=20
Website: https://boredapeyachtclub.com/#/
Congrats if you made it to the end of this article, hope I was able to answer some of your questions about these weird internet pictures that have been selling for ridiculous amounts of money.
At the time of writing the price of 1 Eth was ~$3000, prices reflect this, where there are discrepancies prices reflect the value of Eth at the time of purchase.
