What are NFTs?

Probably by now you've already seen them on the news, online or get mentioned in conversations. What are these "NFTs" aka non-fungible tokens?

What are NFTs?

The super detailed and economic description can be found on Investopedia, but I will try to keep it short.

Have you ever collected anything? If so, why? What was it about the process that made it so enjoyable?

It's culture.

So you can imagine these are like digital trading cards. They can be put on marketplaces, exchanged privately and you can add properties to each one. Similiar to trading card games, you can add "Health" or "Hat" or "Damage Points" on them and of course, have a beautiful picture depicting it.

Non-fungible?

These tokens, are called non-fungible. Because they're irreplaceable. You can have the same amount of money either on paper or in coins. It's still the same value.

Non-fungible tokens cannot be changed to anything else. It's like your favorite childhood teddybear. You fell in love with it and nothing will take it's place. Same as with pretty much any collectible item.

Who is behind them?

The idea for NFTs was created to address a specific problem - centralization.

If you hold your money in one bank, for example and that bank goes under (rare, but not impossible) it goes down with your money, except if you have insurance or whatever the terms are set forth by the bank.

While it does give you customer support and ad e-mails, and offers for loans, and credit and so on, it's still under one company.

Imagine if the internet belonged to a single company.

You'd have to specifically be assigned an account to get on it, you'd get spam and if for some reason they ban you - you're done. You're sen't back to medieval times.

Decentralization, then?

Exactly. NFTs are firstly registered on whats called a "blockchain" with a digital contract. The blockchain is a database. It's a program.

Unlike your banking software, that runs only on servers that the bank owns, this software runs on whoever wants to run it. You can literally download it and run it, to be a part of the network and have data flow through.

It's designed for security and more importantly - for immutability. The data there cannot be changed once it's there. This provides a transparent register of all transactions - who made which NFT, who bought which, who sold which to whom and so on.

Wait, everything is public?

Yes. You are free to remain anonymous, because all you need to do to start working with this technology, is just get a digital wallet. I will go into details in a further post.

Initially, I want you to become familiar with the technology, so that you know what you are signing up for.

Is it like Bitcoin?

No, Bitcoin is a currency.

Is it like Ethereum?

No, Ethereum is also a currency.

So what defines an NFT?

The ERC-721 standard defines what an NFT is. You can read more about it in the official Ethereum docs.

So where can I see them?

For a good taste of what NFTs are used for currently, be sure to visit some of the most popular marketplaces for them:

What's next?

My favorite question.

Next, you should learn about how to get a wallet. I can suggest checking out Metamask, they're widely accepted and will allow you to connect to the above mentioned marketplaces.

Then, find some NFTs you like and look at the author - what they're about, what else have they created and so on.

Summary

So far we've spent time on web1 and web2.

In short - this is the web3.

Hate it or love it, it's going to be really hard to ignore, very soon.