Well, the million-dollar question is … what is an NFT? Anybody can perform a short Google search, and will see the definition by Wikipedia: “A non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from most cryptocurrencies, such as Bitcoin, which are fungible.
NFT ledgers claim to provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. NFTs do not restrict the sharing or copying of the underlying digital files, do not necessarily convey the copyright of the digital files, and do not prevent the creation of NFTs with identical associated files.
NFTs have been used as a speculative asset, and they have drawn increasing criticism for the energy cost and carbon footprint associated with validating blockchain transactions as well as their frequent use in art scams. The NFT market has also been compared to a Ponzi scheme.” But even after seeing this definition, the question comes up again: what is an NFT?
In a nutshell, it is “something” with a unique record on the database that blockchain is Cryptocurrencies like BTC are fungible because you can easily replace one coin with another, but the NFTs are not fungible because every NFT has its own digital signature of the blockchain. So from the blockchain point of view, every NFT is unique. The NFTs can be photos, videos, audio files, digital art, and other things. Just for the sake of the exercise, if you go to Youtube, and if you are uploading a song from the 80s it is most likely that Youtube will show a pop-up alarming you that there is somebody else who is the copyright owner. But if I make a picture of yourself (yes, of yourself, thank you for reading the article), and put it on sale in a marketplace, and make let’s say $1k from this, you may never know that I did that, so you will not even get the equivalent of a coffee from this. So one big question in the NFT space is who is the copyright owner of the digital assets on sale on various platforms. Some of the NFTs don’t have any utility, they are just some files registered on a blockchain, others could be used as an entrance ticket to an event, a private experience, or holding a certain NFT that can allow you to meet your favorite celebrity or personality. I am listing below some of the most important aspects of NFTs to be considered:
Once you have created the file you want to transform into an NFT (the jpeg, audio, or video), you have to mint the NFT, which now is easier than ever, because you just need a marketplace like OpenSea, and a wallet like Metamask so you will actually create the NFT with few clicks. I don’t want to enter here into the technical part of NFT creation, you don’t need that. It is very easy to do it by using similar resources to the ones listed above. Based on the blockchain you choose to launch your NFTs will be certain gas fees, so this choice has to be part of your overall strategy.
NFT Pricing, and selling
When you create an NFT, it is not important the launch price, ideally, it has to start low, but the potential for your NFT to become tradeable because you can have an option to collect royalties, usually around 10% from every secondary sale. If you want to make a profit from NFTs you have to be aware that, let’s say if there are 10 friends, everybody with $10k in their wallet, an NFT starting at $1 can reach … $10k in 10 transactions, they will purchase some press releases writing about the next big thing in NFT which did 10k X until an 11th fool will purchase waiting to become the next NFT millionaire. The story of the first tweet that was sold for 2.9 million, and the owner is struggling to resell it became viral a while ago. According to The Guardian: “Crypto entrepreneur Sina Estavi made headlines in March 2021 when he paid $2.9m for an NFT of Twitter boss Jack Dorsey’s first tweet. But his efforts to resell it have run aground, with a top bid of just $6,800 as of Thursday. The initial purchase was at the time among the most expensive sales of a non-fungible token, or NFT, and came amid a flurry of interest in the niche crypto assets. Estavi put the tweet up for resale on the popular NFT marketplace OpenSea last week, initially asking for $48m.That price tag was removed after offers in the first week were in the low hundreds of dollars. As of Thursday, the highest bid was 2.2 of the cryptocurrency ether – equivalent to about $6,800.” You see, that first tweet, anybody can have, and even frame, I would personally not pay anything more than a couple of hundreds of dollars because this is its value from my point if view. Everything else is inflated hype.
Of course, companies like VISA purchase an NFT for $150k, but because all publications write about this, they get PR worth let’s say $500k for them in rate cards, so it makes sense for them. So worth risking on NFTs when they are at the minting price, but of course, you can decide in any way how to use your money in the NFT space, I just wanted to show you things you may never know.
Join great NFT communities
You can find a lot of great NFT communities on Discord or Telegram to learn about NFTs or which are centered on projects you may like to involve in. Discord tends to become the preferred channel for NFT communities, but I would not drop Telegram for good. Don’t be shy, and purchase some NFTs, especially if you find them at the beginning of the project, at the minting price ideally which is considered to be the lowest price for that NFT.
Overall, I would not suggest staying away from NFTs because they are part of The New Entrepreneurship we are talking about here. Just to be very cautious about what you are doing in this space. The NFTs are digital assets with a potential value associated with them. You can buy, sell, trade, donate, and even use them as gifts for your loved ones.
Of course, there is a learning curve about NFTs but if you are reading this newsletter, you are on the right track. I am happy to receive your feedback anytime, please share this newsletter with your friends if you are finding it valuable, and also please subscribe to my Linkedin newsletter, and the more in-depth newsletter at https://adrianniculescu.substack.com.