All you need to know about NFTs (Non-Fungible Tokens)

We all have dreamt of having a lottery and getting rich by finding a treasure and selling it off. We would be on cloud nine if something like that happens.

Now, imagine that there is a way you can sell random links on the internet for millions of dollars. That will be the perfect recipe for getting rich quickly.

What if I told you something like that exists and you do the exact same thing! I'm sure you'd think that I'm kind of a scammer or something trying to trap you into a sketchy scheme. Of course, I'm not! The thing I mentioned to you is Called Non-Fungible Token.. or in short NFT which can sometimes even fetch you Millions of Dollars.

NFT Token

Sounds cool right. Ya, it is. But before you jump off right away googling how to sell one, it's better for you to know what an NFT actually is...

What is an NFT?

NFT means Non-Fungible Token.

Now that explains zero percent of what NFT is, so let's dig a bit deeper into it.

The term Non-Fungible means that it's something unique and something that cannot be changed. Something like Da Vince's Last Supper would be called Non-Fungible because you can't simply create another Last Supper.

Well.. you can technically create another if you consider taking a screenshot/printout of the above image but that doesn't make the one you have as original. It is just another copy of the Last Supper. The original Last Supper is still in Milan.

Now, you might ask how does Da Vince's original Painting relates to NFTs. Bare with me for a couple of minutes.

I've explained what Non-Fungible is and now, let's understand what a token is.

In this scenario, we can say that a token is something that is identifiable on the Internet. It can be an image, it can be a video or a gif, or any other digital asset present on the internet and is identifiable.

Now, a Non Fungible Token is something on the Internet that is uniquely identifiable. Something like Faded by Alan Walker would classify as an NFT because the original video of Faded by Alan Walker can be uniquely identified.

And with the power of blockchain, we can trade all these digital assets. How it works is that, when you buy an NFT, for example, let's consider that you buy the Music Video of Faded by Alan Walker.

Then, you become the rightful owner of that particular Digital Asset, and your name (or your ID to be specific) is written in the Blockchain, and from thereafter, you own the particular piece of Digital Asset.

And this is how people sell off digital assets in form of NFTs to make money. The following Cat Gif was sold for a whopping $560,000.

NFT Cat GIF

Now, you might ask what's the point in buying an NFT with money when you can just have a look at it or use it for free if it's there on the internet. Well... here is how it is..

When you conduct an auction for the original Last Supper painting, it would obviously be sold for Millions of Dollars because of its sense of uniqueness and originality.

One could simply take a printout and or download the Image of Last Supper present above and call it a day. But why do people pay so much to buy it? The answer is a bit philosophical.

Our Human Brain tends to give high attention and assume high value if something is unique and we get immense pride and joy when we get something that is unique to us and claims it as our own. That's what drives people to spend millions on these.

Now transform the feeling to digital, then people spending lots on NFTs makes sense. Now imagine someone buying a clipping from his favorite NBA match. Then he would own that particular clip forever unless he decides to sell it off.

That would give a person immense happiness as he owns it even though he can view it off for free from the Internet. Now, this is what makes people buy NFTs and there can be many business models based on NFTs for Creators.

For example, I can create an NFT out of this Article you are reading and if you feel this article is worth the money and you would be happy if you become the rightful owner of this article, then you can buy the NFT and own this article.

I can also introduce royalty with this Token so that upon each successive trade, I would get a fixed share of the trade amount as royalty for me and this would make a recurring income for many creators and something like this is good for the creator economy.

Now one might ask what if I sell you NFT of this article and the next day, I just decide to remove this article?? What's the point in buying the NFTs then? That's where Blockchain comes in help.

With the power of blockchain, the whole NFT system is decentralized and hence, there is no central authority that can damage or remove the Token. Know more about blockchain

Types of NFTs

NFTs in Art

NFT Art is by far the most widespread form of NFT out there. Things like Digital Designs, Videos, GIFs are being converted into NFTs and are out on sale for Hundreds of dollars. With NFT Art, digital artists can now gain more ownership over their work.

NFTs in Video Games

While the most Digital Art stands as the most popular form of NFT, Video games are catching up in the NFT world.

The way how NFT works in Video Games is that the creator can generate a Token out of a character or a special skin or any other special element like Guns, etc from the Game, and then they can sell it off!

NFTs in Music

The music industry is one industry where with the help of NFTs and Royalties, Musicians can earn a lot more than what they would earn with the current business model. We have already discussed this in the Alan Walker example.

This would incentivize budding artists as they will get some share of the money even if their work becomes a hit after they've sold the music rights [This is possible because the creator of the content alone can generate a token from it].

NFTs in Sports

One way where we can make use of NFTs is how NBA uses them. If you are unaware, they are creating tokens out of match clippings.

With this, Fans can get to buy their favourite clipping and it's another source of income for the sports leagues.

One can also create a fantasy game model out of NFTs like what Sorare have done.

NFTs in AR

Now one possible application of NFTs in the Future is making tokens out of various objects and elements in AR. Like for example, one can create a unique design of sneakers in AR and make a token out of it.

That would be a great opportunity for AR Developers and NFTs would incentivize people to create more AR assets and would also push more and more people into learning about Augmented Reality and would also contribute to various AR-related projects.

So, in a way, NFTs can help AR technology grow at a faster rate!

Top NFTs

Alright, now that we've seen about what an NFT is and its types, let's have a look into the Top 5 most Expensive NFTs till Mid 2021.

5. just setting up my twttr

At number 5 is a tweet by Twitter CEO, which also happens to be twitter's First ever tweet. This tweet was sold to a Malaysian Businessman for a price of USD 2.9 Million or ETH 630.5826 to be precise.

https://v.cent.co/tweet/20

Jack Dorsey added that the money generated from this NFT will be donated to charity.

4. Crossroads by Beeple

At number 4 is the digital artwork Crossroads by Beeple. The video was designed as a response to the 2020 US Presidential Election and was last sold for 6.6 Million USD.

https://www.niftygateway.com/itemdetail/secondary/0x12f28e2106ce8fd8464885b80ea865e98b465149/100010001

3. Smoking Alien Crypto Punk

This Alien Image designed by Laravel Labs is the Third most expensive Token and was sold for a massive $7.57 Million. Pretty surprising right!

https://www.larvalabs.com/cryptopunks/details/7804

2. The Alien with a headband

The next item in the list is also designed by guys who designed the Smoking Alien Crypto Punk, but this time, it doesn't smoke and as a token of appreciation for not smoking, people have awarded the token an extra 10,000 USD by buying the Token at $7.58 Million.

https://www.larvalabs.com/cryptopunks/details/3100