What Are NFT’s & Why Are They Important?
What’s going on fam?! I hope you’re all doing well and thank you for dropping in! If you follow me on Instagram or Twitter, then you know that I’ve been diving deep down the Crypto & NFT rabbit hole the past 6 months. It’s something I’m not only passionate about but something that I genuinely believe will change the world. But before we really jump in, I want to give credit to a few people that have opened my eyes to this technology and who I continue to learn from everyday. First and foremost, Cody from Investors Underground originally got me on to Decentraland (a virtual world) and that sparked EVERYTHING for me in late 2020. He helped me a ton in the Crypto space and gave me a lot of good insights on where and how to start. Then Gary Vaynerchuk helped bring a lot more attention to this space and has been a huge resource for myself and so many others. So big shoutout to those two and if you don’t follow them, I highly recommend you start! Please go check out Gary’s NFT project VeeFriends, purchase one, and join me at VeeCon!
Before I go into what an NFT is, I want you to know just how early we are to the game. I’m not quite old enough to remember what was going on in 1995 with the Internet because I was only 8 years old. However I am old enough to remember the shift that took place on Social Media back in early 2000 through 2005. It started with MySpace and then Facebook eventually took over. While I remember the shift happening, it wasn’t until years later that I understood how big of a deal this Social Media thing actually was and I had already missed out on “the next big thing”.
The reason I’m explaining that to you is because I do see NFT’s as another technology shift that will change our society and our world forever. I will NOT be late to the game like I was with Social. Similar to the early days of the Internet and Social Media, a lot of people are bashing NFT’s and talking about how it’s just a fad and that they’ll go away. The thing I hear the most is, “how the hell can you justify spending hundreds or thousands or even millions of dollars on something that someone can just screenshot?”. My response is always, “Anything, including a Picasso, can be replicated… the difference between the original and the fake might not even be detectible by the human eye. With NFT’s, people can rip off the original all they want, it will never be the original because the original can be traced back to the creator on the blockchain”. (I’ll explain blockchain in a few)
Additionally, NFT’s are so much more than just a GIF or digital piece of art. It’s a smart contract that’s built mostly on the Ethereum blockchain and anything can be worked into that contract. While right now, the hot thing in the NFT space is art and collectibles, I genuinely believe we’ll see bigger implementations of this technology. Things we say, “Oh, that’ll never change” will most certainly change in the not so distant future.
So, what is an NFT?
NFT stands for “non-fungible token”… Ok Matty, but what the hell does that actually mean? In its simplest form, it’s a digital asset that lives mostly on the Ethereum blockchain that cannot be replicated. I know this still sounds like French to most people so let me try to explain what a “fungible” token is.
A fungible token is something that can be interchangeable with another unit of that same asset. So let’s say you and I both have a $100 bill. If you give me your bill and I give you my bill, absolutely nothing has changed outside of the actual piece of paper because they both represent the same value.
A non-fungible token is something that represents an actual value, which means no two are exactly the same. An example in the real world would be a house. You can‘t swap two identical house because there is no such thing. You can’t just exchange your house for the exact same house in the exact same location… got it? You exchange your dollars for an asset. In short, that’s what an NFT is. You exchange your ETH for a digital asset, like a collectible, an experience or piece of art.
So, what’s this Blockchain thing?
The blockchain is essentially a public ledger of data that gets stored in blocks. Once that block is filled, it creates a new block, hence the chain…blockchain. Check out this in depth blockchain guide here. Once the data is stored on the blockchain, it is there permanently and cannot be changed. You can go back and see the original creator of any NFT, see which wallets have purchased Bitcoin or any other coin, and even look up the contract that shows the price paid and the wallets that were involved in that transaction. Essentially, pretty soon, no one is going to be able to “fake it until you make it” because everything is transparent on the blockchain.
The new and exciting thing the blockchain allows for is NFT’s. It allows us to create a digital asset that can be traded, bought, and sold for digital currency. While most people are caught up on Beeple’s $69 million dollar sale for a digital piece of art, the applications for this technology are endless. The best part about the blockchain is that anything can be verified by anyone that has an internet connection. No hoops have to be jumped through! Just log on and see if someone is full of shit… it’s gonna be great!
How To Create NFT’s.
Believe it or not, creating an NFT is extremely easy. In as much time as it takes you to make a post on Instagram, I can upload an NFT for sale on a marketplace just as quickly. That NFT can be anything! It can be a drawing. Maybe a picture you took on a vacation. A GIF. A song you sang. A video you created.
Once you decide on what you want to “mint” on the blockchain, it will live in your digital wallet. You created that asset and nobody else can change that. From there, you can choose to hold it or you can list it for sale on a marketplace like OpenSea.io. If someone likes your work, they could either make you an offer or purchase it outright if it’s listed for sale. If nobody likes it, it will simply just sit there in your wallet, eventually for you to flex once public wallets become the new norm :) To learn how to create a wallet, read my guide here.
Selling your NFT…
Once you mint your NFT and it’s in your wallet, you can choose to list if for sale on a marketplace. Some of the more popular marketplaces right now are OpenSea, Rarible, and Foundation. Please understand that just because you mint an NFT and list it for sale, that doesn’t mean you will sell it! I think that’s where there is a misconception in this space right now. Anyone thinks they can create an NFT because it’s the new thing and they are just in it for a quick buck. In reality, only a handful of these will end up ever selling for $69M+ and most wont ever sell in the first place.
With that being said, if you are an artist or musician, there is absolutely no reason you shouldn’t be minting your work on the blockchain. The reason I say this is because you can as the creator, set a commission every time your NFT resells. In perpetuity. Can you imagine investing in someone like my homie Anthony Sims before they become the next big thing? Not only are you supporting someone on the come up, but if/when they do pop off because their work is amazing and you seen it before everyone else, both you and the artist get paid when that piece sells for 100ETH.
The moral of the story is, you have to build brand and have a good product. Ultimately, that’s why people are going to purchase or support your NFT or NFT project.
Should you buy NFT’s?
I’m no financial advisor so I recommend always doing your own due diligence. In all honesty, a far majority of you SHOULD NOT buy NFT’s because I’m afraid some of you are in it for the wrong reasons. I tweeted below the 2 circumstances in which I’ll buy an NFT and I think it’s extremely important to understand this…
I think too many people see a sale for $69M and their eyes light up. Like, what?! I can post some shit on this blockchain thing and someone is going to pay me in this weird cryptocoin thing and make millions? What they don’t know is the piece that sold for $69M is a compilation of 5000 daily pieces of art put into one massive piece of art. This dude put out 1 piece of art for 5000 straight days before he sold that piece for $69M. That’s dedication and hard work paying off, not an overnight success… please understand this!
If you are going to buy NFT’s, I do highly recommend that you look into projects that you can get behind. It’s the same thing when we were kids. Whether it was baseball cards, Magic, Pokemon cards, Crazy Bones, Beanie Babies, etc. It’s the same thing with digital collectibles. We collected those things because we loved to collect. We love to trade by nature and it brings that kid back out in a lot of us. With NFT’s, I first started with Chubbies, which reminded me a lot of Pokemon. I wasn’t buying them to make any money on them (which I probably won’t) but I bought them because it was this new technology and I thought they were cute as hell. Again, if you’re going to buy something that is purely a collectible or piece of art, please know that you may never see that money again!
With all this being said, there is the smart contract behind the NFT which is what excites me the most about the technology. You can attach anything to that contract. For example, Gary’s 10,000+ token project had it built in to the contract that each token represents a 3 year ticket to an exclusive conference called VeeCon. This conference should be an incredible networking and learning opportunity for so many. So in addition to owning a collectible, you’re also getting access to something exclusive and tangible. Oh, and by the way, after the first year, once the conference is being talked about by everyone and only 4000 people have tokens…those tokens might be worth more and you might be able to make a profit, even after already going to the conference!
A musician can put out an NFT that is 1 of 1 and the owner of that token can get backstage passes for 3 shows per year with 3 friends. An athlete can sell 5000 tokens where 5 of them will be selected at random to sit court side and practice with the team before/after the game. A regular guy like me can give unlimited access to my stock and crypto watch lists but exclusively to The Bullish Bears token holders and that’s it. Could you imagine if I become the next Warren Buffet and you’re only 1 of a few thousand people that have exclusive access to me on a daily basis? DAYUM!
Why Are NFT’s Important?
NFT’s are important for so many reasons but most importantly, it brings transparency and ownership to many industries that need it badly! While there are many other reasons, I genuinely believe that this will give people who create the opportunity to cut out the middle man. It will also give people who want to support those creators a way to invest in them, knowing that nobody is taking a cut but them. It will truly change the entire landscape of the music and arts industries forever.
Additionally, there is the alternative investment here that is certainly a reality if you do your homework. I’ve seen VeeFriends as low as .5ETH and now you can’t get one for under 4ETH only a month later. That can be life-changing money for some people. Again, you have to do your homework. Not all investments will work out. In fact, most will not. Go back to my 2 rules above on why I will buy an NFT. It’s so important you understand it.
Hopefully this has helped you realize that NFT’s are at least not just a piece of digital art. I know it’s a hard thing to wrap your head around. So was the internet for some people. So was getting into a stranger’s car. I hope this has brought some light to what is in store and how early we still are in this game. My goal with this article is just to bring some light to something that I love. I’m not saying you should invest in NFT’s or Crypto by any means. I’m just hoping it opens your eyes to something fun and exciting :)
*I will disclose that I am invested a bunch in ETH, Matic, and have roughly 100 NFT’s as I’m typing this. I’m in this for the long haul!
Please, if you haven’t already, please, please, please check out my project The Bullish Bears. I’m looking to build out these characters to educate and inspire people to be more positive and optimistic. I want to bring more light to people struggling and provide them with the tools to get to the next level. I’m excited to see this thing through and appreciate you all for coming along with on this journey :)