What the NFT??
- Timothy Phillips
- May 12, 2021
- 6 min read
Updated: Jul 21, 2022
Have you had an online presence over the past few months? If your answer was yes, you might have noticed a new buzzword floating around the internet called an NFT. Even if you have refused to turn on your computer or look at your phone, you probably have seen a story on the news about the next big thing, "The NFT". Some of you may have no idea what I am talking about. Never heard a single word about the future of collectibles? This article will explain everything you need to know about the NFT.
What is an NFT??
An NFT or "Non-fungible token," is a digital asset that is part of the Etherium blockchain. Each individual asset holds value in the form of cryptocurrency, and has a unique string of data that makes it non-interchangeable (that's what non-fungible means).
For example, say that you have a dollar bill and want to go on a trip to Europe in the year 2021. On your way to Europe, that dollar is exchanged for a Euro at a conversion rate of one dollar for 0.83 Euros. In this example, that dollar bill and 0.83 Euros are considered exchangeable or fungible. This is because the asset (dollar bill) is defined by its value rather than its unique set of properties.
Say you purchased a limited edition shoe that was numbered 10 out of 10,000. That shoe is known as non-fungible because it is not interchangeable with other items due to its unique properties. It is one of a kind. You can't trade five dollars for the shoe because the shoe is not defined by a set value.
Another important quality of an NFT is how the data is stored. The data for an individual NFT is connected to a ledger (known as blockchain) which stores information that can distinguish itself from other replicas. By being connected to a ledger and having a unique set of data, an NFT can take the form of anything. Music, art, a video, you name it.
Access to an NFT is also unrestricted. This means that anyone can look at it online and download it, much like music or a photo on Google. However, unlike music, art, or a photo, when a copy is made of an NFT, the value does not remain the same as the original because it does not have the same data set. Downloading an NFT wouldn't do you any better because that download would not hold the same information that makes the original NFT a part of the Etherium blockchain.
With all of that out of the way, hopefully you have a better understanding of what an NFT actually is. If you still have no idea what I just said, I understand. I was super confused when I first heard about them too! Feel free to go to https://ethereum.org/en/nft/ to learn more, or just google "What is an NFT."
What's the Point?
You may have a slight understanding of what an NFT is now, but I imagine you are questioning the NFT's legitimacy. You might even be sitting there thinking, "What's the point of even owning an NFT when you can just find the exact same item online?" That is a good question and a fair point.
Let me indulge your curiosity a little bit and ask you a question in return. What is the point of buying a painting when you could print out the exact same painting and frame it in your house? Is having the original Mona Lisa the same as printing out a copy that you found online, and hanging it in your room? I would say NO.
Collectibles and memorabilia haven't exploded in popularity over the past 50 years for nothing. This all underlies a deeper meaning in the world of collectibles. A copy and the actual item just aren't the same!
People want to have their own unique asset. People want to take a chance, hoping to see that asset grow in value. People want to have something that they can show off to others with enthusiasm and excitement. The scarcity and authenticity of a rare item is what draws people into collecting. The more scarce that item is, the greater the value will be. This doesn't change whether it is a physical asset or a virtual asset. These properties are what make an NFT so unique. Due to it's one of a kind data backed by the Etherium blockchain, each NFT is a unique creation that is scarce and valuable.
The Future of Collectibles
The freshness and accessibility that NFTs have brought collecting, led by such an innovative and futuristic idea has created an excitement around the hobby. With crazy NFT purchases ranging from $1 to $68 million, people have referred to the past couple of months as the NFT craze. Analysts have said that the collectible bubble is about to burst backed by their reasoning of what happened to Beanie Babies.
What makes me optimistic about the future of NFTs is the fact that this type of collectible is not just another gimmick that people can buy. It is an asset that will mesh perfectly with the technological advancements that are on the way. NFT collecting also follows the exact same collecting concepts as physical items in the "real world," yet there is no risk of your collectible suffering physical damage.
Not being able to hold and touch your purchase definitely makes this world of collecting different, but an NFT can be placed and used in the virtual world. It will take some time for the general public to wrap their heads around it. However, what happens when virtual reality gains in popularity and inevitably takes hold of the world? We all know that the next big thing on the horizon is virtual reality. We are already seeing AR or augmented reality incorporated into our lives. Virtual reality video games are already out there. It will not be too long before people realize the simplicity and excitement that this futuristic gaming platform can provide. The COVID pandemic has already accelerated the push to the virtual world.
Stay with me here, but contemplate for a second the idea that we may be progressing towards the acceptance of a virtual world. Companies are already starting to sell virtual characters and even virtual plots of land. This may seem crazy at this moment but why walk to places and meet people when you could easily do it from the seat of your chair?
The early acceptors of NFTs, who have been building their collection will already have an advantage in that futuristic world. The next big thing could be developing your virtual world and virtual life. NFT's are that first step to having something unique and connectable to the physical world. Why not start early?
My NFT Connection
Throughout my life I have always been an avid baseball card and memorabilia collector. I have collected tons of different collectibles over the years.
When I started to hear about the rise in popularity of NFTs, I figured I should learn some more about them. I read about digital horse farms and digital horse racing, art collectibles, and even purchasing digital houses. Then came virtual trading cards. The possibilities seemed endless! It took the COVID pandemic to really ignite the fire and send NFTs to the moon. It was only a matter of time before I knew that I had to get on board too.
After doing extensive research on the topic, I decided to go with my roots and start collecting NFTs the only way i knew how. Through baseball and basketball cards! ToppsMLB and NBA TopShot allowed me to do this. I first indulged in MLB's new NFT baseball cards and then got involved with NBA TopShot moments. Check out my first NBA TopShot moment above. Pretty cool right! From that first purchase, I was hooked. Now I consider myself an NFT collector. What's stopping you from becoming one too?
To get involved with some of my favorites check out:
- ToppsMLB
Good resources to better understand NFT's:
Until next time,
Tim Phillips
Comments