The term “NFT” has created tremendous buzz in the past year.
NFT’s purchased for as little as $50 have been sold for more than $100K…and more! Athletes like Tom Brady, celebrities such as Paris Hilton, and even politicians like Blake Masters, have offered their own NFT collections.
But what exactly is an NFT? How do they work?… and why should I care?
This very subject has been a topic of major discussions, happening daily on Twitter
Spaces, Discord servers, and other online forums. Instead of wasting hours of time, sorting
through multiple websites, and still being lost at the end, I’ll offer a brief summary of these questions about NFT’s, here:
NFT is short for Non-Fungible Token.
Non-fungible, in simple terms, means non-exchangeable or non-refundable.
So, this token is yours! You own it unless you sell it to another individual.
With a typical cryptocurrency token, you can exchange it anytime through a liquidity pool. For NFTs, you must wait for a buyer, if one ever arrives.
An NFT is a token on the blockchain, that stores data, similar to the way information is stored on a CD or floppy disc. However, this information is stored online. A very important feature
of NFTs and cryptocurrencies alike is where they live, on the blockchain, or in what “ecosystem.” Some NFT’s are on Ethereum, while others live on faster, but less secure chains, like Solana. Knowing the security, capabilities, and speed of these blockchains will help you decide what type of NFT is best for you.
What an NFT represents, and the blockchain it lives on, are tremendously important. These tokens can be as simple as a profile picture (pfp) or have more complex code to
represent a wide variety of things. One example is an access pass, for use both online and in real life. There are NFT’s that may allow you access to nightclubs, yacht parties, professional
sporting events, and even unique experiences.
Sometimes an NFT will allow you access to a secret Discord server, or a special section on your favorite website. The possibilities are endless!
This history of these tokens is completely transparent, as well. Living on the blockchain,
we can verify whether it is the original product, or fraudulent. This allows for business to be
conducted world-wide, with confidence: you can trust the product you are receiving is authentic. In the music industry, artist Tory Lanez put an entire album on an NFT. This means the only way to
listen to this album is to own it, preventing his music from being stolen. Companies like Adidas,
Louis Vuitton, and others are using NFT’s to validate the authenticity of their product to their
customers. This prevents counterfeit items from being produced and sold as prevalently, because they cannot be validated as the original, without their accompanying NFT.
Video game studios are using NFT’s as in-game items, as well. Games like Star Atlas,
MetaOps, and others are embracing this technology. Players who own the in-game assets can
sometimes earn a few bucks by playing the game. This new model of gaming being created around NFT’s is referred to as play to earn, often abbreviated as “P2E.”
So… how can I get in on the action?
It is very easy to get started! Here’s what the process may look like for buying your first NFT:
- Using a cryptocurrency platform like Coinbase, we first purchase Ethereum or Solana. We will use Solana for this example, because of factors like transaction speed and gas fees.
- Next, download and create a Phantom wallet. Install and pin the Phantom extension directly on your browser. You will then need to send Solana to your Phantom address.
- You are now set to go explore an NFT marketplace: Magic Eden.io. Find a NFT collection you like and that appeals to you. Personally, I like Alpha Gorillas. Once you have found one you like, don’t purchase just yet!
- First: do your research! You may start by finding the website, Discord, and Twitter accounts associated with that NFT collection. Ensure everything is legitimate. You may look to see normal chats happening, comments that make sense, and moderators actively answering questions. If and when you are comfortable, go back to Magic Eden.io. Are you ready?
- Return to the NFT you’re interested in, and connect your Phantom wallet to Magic Eden.io, if you haven’t already.
- The NFT will have a “buy now” price. If this is an acceptable price, select ‘buy now.’ A pop-up will appear in your Phantom wallet to accept or decline the transaction. Approve the transaction. This approval sends Solana from your wallet to the seller, which automates the process of sending the NFT to your wallet.
- After the transaction is complete, you can now see the NFT in your Phantom wallet.
- Congratulations, you have just purchased your first NFT! You now have to option to show off your NFT to your friends, use the NFT if allowed, or try to sell the NFT for a higher price.
The excitement and joy NFT’s are bringing to people is overwhelming. Entire on-line communities are being formed around NFT collections. Sharing information and experiences, like
these on-line communities, demonstrates the future of how society will interact in the metaverse.
*Remember, NFT’s fluctuate in value. The saying if you buy for the art, you can never lose in NFT’s!