​​So, what are NFTs?

First off, look at this; popular GIF of the Nyan Cat.

Nyan Cat

We all saw this viral meme in 2011. This was nothing more than a digital drawing to cast your eyes upon for a few seconds.

So… What about it?

In February 2021, this GIF was sold as an NFT for 300ETH (ETH-cryptocurrency that powers Etherium), equivalent to an estimate of about $600,000. Yeah, that’s right, my ‘0’ key on the keyboard didn’t get stuck.

To understand how that was possible, we first need to grasp what NFTs are. NFT is a Non-Fungible Token.

Let’s break it down even more. Non-Fungible in simple terms means Non-Replaceable; let me give you an example of what I mean; if you have 5 $1 notes in your wallet, you can exchange them for 1 $5 note because they are replaceable and exchangeable. On the other hand, Mona Lisa is non-replaceable; it’s unique.

NFT is a type of cryptographic token, each of which is unique and exists in a single copy, it cannot be divided. All of the information about the author, buyer and all of transactions are stored on the blockchain. In simple terms, an NFT is a digital certificate attached to a unique object.

NFTs have been around for a while since 2014; however, they are becoming increasingly popular over the past couple of years due to the increasing amount of interest shared towards buying and selling digital artwork. The graph below shows just how popular NFTs have become.

Size of Non-Fungible Token Market

Let’s look at Mike Winkelmann, commonly known as Beeple. Mike is a digital artist.

What’s so special about him, you might ask?

Well, Beeple created a digital NFT composed of 5,000 daily drawings, and if that’s not impressive, wait until you hear this; the digital artwork sold for $69 million; here is the image below.

Everydays — The First 5000 Days by Beeple

That’s great, but why?

Anyone can go on the internet right now and download this very image and any other NFTs worth millions of dollars, and because of this, there has been a lot of controversy around digital art and NFTs. But from my point of view, it’s not that much different from going to an art gallery and purchasing an oil painting and hanging it on the wall by a fireplace. And just like any great oil painting, it will most likely have a signature signed by the artist.

NFT acts as a digital certificate of authenticity, that very same signature that you would have on an oil painting. Anyone can download digital artwork, but your’s will simply be a copy of the original. And just like the Mona Lisa, NFTs are scarce, they are unique, and only one copy can exist.

‘I still don’t understand the point of spending so much money on a digital artwork.’

It’s all about hype. Humans are becoming more and more attached to the internet and anything digital; we lead double lives.

Once we have everything, we need such as; food, shelter, water, etc. We look to put value into non-valuable things; that’s just how we are. We want to get hyped up on minor things, and this has just become one of them. Just like you getting a legendary pokemon card when you were younger was probably the peak of your year, this is the same. But for adults.

Nothing has value, really. It’s up to us, humans, to decide what we want to give value and what’s worthless.

Deep, I know.

What are NFTs used for?

So, I talked about how people can benefit financially from NFTs, but it’s a little more than that. Artists worldwide are starting to create more and more digital artwork, primarily due to the world’s pandemic situation. NFTs give artists an alternative way to monetize their work, meaning that they won’t have to rely on galleries or auction houses as a way to earn money. Yay for artists.

It doesn’t stop there. Huge businesses such as Taco Bell and Charmin have auctioned off NFT and have raised a lot of money for charities. More and more companies are following their lead.

Controversy surrounding NFTs

You might think that all in all, NFTs are great! They are a way to earn money or spend it and show off in the digital world.

However…

It’s a common misconception that NFTs are bad for the environment, NFTs live on the blockchain, and the blockchain relies on computers to do millions of calculations a second,

24/7

365 days a year

Forever.

Most NFTs are stored on a blockchain called Ethereum. Ethereum currently uses 33TWH of electricity. For those of you who have no idea whether that’s a lot or nothing at all; 33TWH, is the same amount of power as Serbia.

Let me elaborate, electricity usually requires power burning of fossil fuels, mega-dams, nuclear power, etc. Which release CO2 into the atmosphere resulting in global warming. You don’t need me to tell you just how horrendously bad this is for the environment.

This article could have either deterred you away from NFTs, or it could have been a great advertisement for them. And if it’s the latter…

How and where can I buy NFTs?

The process of buying NFTs is a little more complicated than just dipping into a shopping mall and purchasing yourself some mint sneakers. You can’t buy NFTs with regular money.

Step 1: Get Digital Wallet

Get a crypto wallet. You will need it to buy NTF and pay marketplace fees.The most common for crypto wallet is MetaMask.

Step 2: Purchase Ethereum

Most NFT marketplaces run on the Ethereum blockchain, so you need ETH to pay trading fees, and for the NTF itself.

Step 3: Connect your wallet to the chosen NFT Marketplace.

OpenSea is currently the most popular marketplace for buying NTF.

Step 4: Buy your NFT

Once you’ve got everything set up, the rest is easy. Most of the trading platforms operate in the auction format. Trading on NTF marketplaces is similar to eBay, only you buy a digital object.

Step 5: Congratulations, you have officially got bragging rights for being an owner of an NFT.

Let’s conclude

For those of you who are not tech-savvy and get a headache from trying to understand all this, it’s great to know the basics, as this will become a vital part of our future. Or you can scratch everything I’ve written and resume with your day as if this never happened. NFTs are a good way to make a little bit of cash whether you are an artist or simply want to hop on this craze; they are also a great way to raise some money for charity. You have to consider the negative repercussions such as global warming.

You probably have a lot to process, so for the time being, I will leave you with this,

Yeah, the first tweet ever just sold for $2.9m.

Social media & blockchain combined | A new revolutionary social platform that will reward you for your creativity