NFT’s Explained: Everything You Need to Know

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This global phenomenon has taken the world by storm, leaving many of us equally perplexed. While NFTs (Non-Fungible Tokens) have been around since 2014, they gained significant prominence in mainstream media in 2021, sparking widespread interest within the business realm. With involvement in million-dollar auctions and endorsements from A-list celebrities, NFTs have captivated public attention.

At Bold x Collective, we frequently receive inquiries from clients and prospects seeking clarity on NFTs and how they can be utilized for their brands. This blog provides a comprehensive breakdown, covering everything you need to know about NFTs and their potential applications.

What IS AN NFT?

The acronym NFT stands for Non-fungible Token, indicating that it represents a one-of-a-kind digital asset that cannot be substituted with something else. While NFTs can be exchanged with other NFTs, each one possesses its own distinct characteristics.

An NFT is essentially a digital record stored on a blockchain, which is a digitally distributed public ledger. This record contains essential information about the associated file, including details about its creator, the individuals involved in linking it to the blockchain, and the current or past owners of the asset.

IS it LIKE CRYPTOCURRENCY?

NFTs are constructed using the same underlying technology as cryptocurrencies like Bitcoin and Ethereum. However, unlike cryptocurrencies, NFTs are non-fungible, meaning each NFT has a distinct and unique signature. As a result, NFTs cannot be interchanged or considered equal in value.

This distinction sets NFTs apart from cryptocurrencies. Cryptocurrencies are fungible, meaning their value is uniform, enabling seamless trading and exchange between them. This fungibility is what establishes cryptocurrencies as a reliable medium for transactional trading on blockchain networks.

WHAT CAN BE AN NFT?

In essence, an NFT can encompass various forms of digital content. Some examples include drawings, music, video games, digital art, and more.

These digital assets can be sold on online marketplaces, and one prominent example is "OpenSea," which has reached a staggering valuation of over 13 billion dollars. Notable brands like Adidas have minted NFTs in collaborations such as the Bored Ape Yacht Club and a joint project with Prada. Even well-known entities like McDonald's and Twitter have integrated NFTs into their marketing strategies on this platform.

Evidently, substantial investments are being made in these digital files, highlighting the significant monetary value associated with NFTs.

WHAT ARE they USED FOR?

NFTs and blockchain ledgers present a unique opportunity for content creators and artists to monetize their projects without the traditional reliance on physical resources. This means that artists are not limited to gallery shows or live auctions to sell their artwork.

With NFTs, artists can directly sell their creations to consumers and even program in royalties, ensuring that they receive a percentage of future sales whenever their art is transferred to a new owner. This innovative approach creates a consistent stream of revenue for artists, a feature typically unavailable when dealing with physical art.

From an artist's perspective, NFTs hold immense potential and offer a promising glimpse into the future of the industry. They provide artists with valuable opportunities and possibilities that can transform their creative endeavors into sustainable ventures.

WHERE CAN I BUY them?

Before diving into the process, it is crucial to establish a digital wallet to securely store your NFTs and cryptocurrencies. Platforms such as PayPal or Coinbase can be utilized to purchase cryptocurrencies. Once you have set up your digital wallet and are prepared to proceed, you can then explore various marketplaces to engage in NFT transactions.

The current largest NFT marketplaces are as follows:

• OpenSea.io; Refers to itself as the “amazon of NFTs”, this marketplace has a large and wide variety of different types of NFTs consumers may want to investigate.

• Rarible; This marketplace, like OpenSea, allows artists to create and sell their own NFTs. There is also the feature of RARI tokens that allows holders to contribute to features like fees or community guidelines.

• Foundation; On this platform, artists must receive “upvotes” or an invitation from other creators to be able to post their art. This platform would be best for artists looking to capitalize on their projects in an exclusive manner

WHERE DOES THE VALUE LIE IN AN NFT?

You might be questioning why anyone would justify investing significant money in a digital file that can be replicated and shared freely. To better understand this, let's draw a parallel with artwork.

Consider Van Gogh's "Starry Night." Numerous people can possess a print of the painting, but only one original masterpiece exists. While copies of digital files can indeed match the quality, the significance lies in owning the original file itself. It's about the value of owning a unique and authenticated piece of digital content.

SHOULD I GET INTO NFTS?

The decision to engage with NFTs varies depending on whether you are a creative artist selling your work or a buyer/collector of NFTs. If you are an artist, selling your work as an NFT can be a favourable choice, granting access to a market that may have limited opportunities in the physical world. Moreover, as the popularity and value of an NFT grow, artists can expect corresponding financial rewards.

Conversely, buyers and collectors of NFTs often make purchases to support their chosen artists and enjoy certain ownership benefits, such as displaying the NFT or using it as a profile picture. This aspect sometimes sparks controversy, raising questions about the true worthiness of investing in NFTs.

Ultimately, the value and perception of NFTs are subjective and vary from person to person. Whether you find these digital assets worthwhile depends on your perspective.

If you are interested in exploring NFTs further, it is crucial to conduct thorough research beforehand. Treat the decision to purchase or sell NFTs as you would any other investment or business decision. For more insightful blogs and articles related to business, visit the Bold x Collective blog.