Since I built my Raspberry Pi to mine crypto – I’ve been exploring other sections of the Crypto/DeFi space, which brings me to NFTs.
Admittedly, I didn’t know really anything before I got started other than I kept hearing how collections of simple 8-bit avatars were going for insane amounts of money. So, again – I decided to dig in and do some research.
For me though, it’s not enough to just learn about it – I want to do it. So, join me in my first exploratory dive into the world of NFTs.
What is an NFT?
If you’re anything like me, you’ve heard NFT being tossed around a bunch – but its just a .jpg – and if you buy one, do you really own it?
Let’s start with this definition of a non-fungible token:
NFTs (or “non-fungible tokens”) are a special kind of cryptoasset in which each token is unique — as opposed to “fungible” assets like Bitcoin and dollar bills, which are all worth exactly the same amount. Because every NFT is unique, they can be used to authenticate ownership of digital assets like artworks, recordings, and virtual real estate or pets.
Credit: Coinbase
I think the above statement from Coinbase helps begin painting the picture. You have the digital asset (image, music, etc) and then you have the NFT – they’re kind of different things.
Do you really own it?
So, let me try and put this a different way – as someone who used to collect other various memorabilia throughout the years. The token (NFT) is more like the “Certificate of Authenticity” for whatever digital asset it’s tied to.
So, sure – someone can go ahead and “right click > save image” on that asset, but they won’t be able to verify their ownership.
You might be thinking, why on earth would I need to verify my ownership of an image if I can just save it off the internet? Besides things like clout or re-selling, certain NFTs can be used to give you access to private accounts and things.
One example is Bored Ape Yacht Club – if you have one of their NFTs, you gain access to certain parts of their website that you couldn’t otherwise enter. Is it worth it? No idea, I don’t have one.
Another popular space that is growing very quickly is NFT gaming. In these games you can play to earn NFTs that can then be bought/sold on marketplaces.
Where does this verification live?
Unlike a certificate of authenticity that you toss in your fire-proof safe and forget about, the NFTs are stored in a digital wallet that you own – and are backed up by the block-chain that they originated on – typically Etherium.
Quick note: when I say backed up, I mean more verified – if you lose access to your digital wallet – just like losing your real wallet, you’re screwed.
Conclusion
Is this the best explanation of what an NFT is or why they are apparently so valuable? Far from it, but hopefully it’s a little bit more understandable. If you want to do some more in depth listening on the subject – you can listen to this podcast that was recommended to me by a friend: https://pca.st/xmrneelr