Original copies of cat memes….
Tweets that sell for millions….
Virtual Punk Rockers….
What the hell are all these things that people call NFTs?
Well in short… NFTs, or non-fungible tokens are verifiable unique digital assets that represent a wide arrangement of tangible and intangible items. This could be anything from digital sports cards to original artwork and even collectible socks.
The question is… are they still a good investment? Well, that’s where things get tricky — so let’s start with the basics. Socks!
Yes, you read that last part right. In 2019, DeFi (decentralized finance) protocol Uniswap launched Unisocks – a limited edition NFT that came with a dynamically priced pair of socks. Earlier this year one SOCK token traded at $75,000.
“500 pairs of digital socks have a market cap of $20 million. Memes are the new money”, wrote Meltem Demirors, Chief Strategy Officer at Coinshares.
Despite their popularity, NFTs are hard for some investors to take seriously. Others like entrepreneur legend Gary Vaynerchuk see them as a massive opportunity.
Gary Vee predicts we’ll see entire new intellectual properties build their ecosystem through NFTs within three years.
Here’s everything you need to know about investing in NFTs.
How do NFTs Work Exactly?
NFTs are primarily built on the Ethereum blockchain. At their heart, NFTs cut out the middleman much like other crypto projects.
Artists can directly publish their work and earn lifetime royalties. Startup toy companies can launch their next line of products through NFTs. And video games can offer exclusive rewards as NFTs. The possibilities are endless.
On Ethereum, and other smart contract-based blockchains, you can create assets, applications and tokens that are immutable. In the case of Ethereum-based NFTs, each asset is locked by a cryptographic hash and minted on the blockchain by an ERC-721 token standard.
Like Elvis Presley’s guitar or an original Banksy painting, NFTs are special because you have proof that it’s the original. This is why NFTs with historical or cultural significance have made investors fortunes.
As per Ethereum’s official website —
If you own an NFT:
- You can easily prove you own it.
- No one can manipulate it in any way.
- You can sell it, and in some cases, this will earn the original creator resale royalties.
- Or, you can hold it forever, resting comfortably knowing your asset is secured by your wallet on Ethereum.
If you create an NFT:
- You can easily prove you’re the creator.
- You determine the scarcity.
- You can earn royalties every time it’s sold.
- You can sell it on any NFT market or peer-to-peer. You’re not locked into any platform and you don’t need anyone to intermediate.
How to Spot Good NFTs
Right now utility-driven NFTs are dominating the market.
Anyone can pay thousands in ETH for a picture of Elon Musk smoking a joint or Vitalik Buterin wearing a cat t-shirt, but not everyone can own an NFT that actually does something in the real world.
Hip-hop star Tory Lanez recently released a utility-driven NFT series with Bondly Finance. Bondly’s CEO, Brandon Smith, described the collection as creating a unique relationship between artist and fans. Token holders received exclusive access to Tory’s next single, merchandise, as well as special concerts and events.
This is only one example of utility-driven NFTs. Gary Vee’s NFT venture “VeeFriends” is a series of idiosyncratic characters that unlocks a three-year access pass to attend VeeCon in 2022, 2023 and 2024.
Popular video game Decentraland is one giant NFT project offering virtual real estate, which many have turned into a means of earning passive income
Before interacting with any of these applications you must first set up a crypto wallet.
You can read more about this here in our guide about Properly Setting up a Crypto Wallet
How can you Sell NFTs?
You can sell music, artwork or other physical collectibles as NFTs. And because NFTs offer lifetime royalty fees, you can earn passive income whenever someone resells your work.
This is how to go about the process:
Selling Music: Uploading music can be done directly on marketplaces like Rarible. Turning music into an NFT is a straightforward process.
Once you connect your wallet you’ll be able to list your music effortlessly.
The catch is… independent music has not caught on in the NFT space as of yet, but big label artists are beginning to release their work as NFTs. Maybe this can inspire a larger push for NFT-backed music.
Selling Artwork: Artwork is a different beast when compared to music. Fully edited, effect-heavy artwork stands out most on NFT marketplaces.
Top artists seem to have extensive experience editing in Adobe Photoshop or other online photo editors.
Artwork that seems to appreciate in value often reflects on the popularity of the artist or the cultural significance of the piece.
It’s a very tricky industry to break into.
NFTs for Writers: Yes, even writing stands to transform due to NFTs. As it stands the best platform for writers is Mirror.xyz. Their mission: “Through a decentralized, user-owned, crypto-based network, Mirror’s publishing platform revolutionizes the way we express, share, and monetize our thoughts.”
10 writers are voted into the community each week based on a highly competitive poll. When you’re voted in you’re given a $WRITE token and gain the ability to publish on the platform.
Bottom Line
To be frank… most NFTs are a fad that won’t ever make it.
They’re a waste of money.
This is what the NFT market has endured recently as the hype died down, as many experienced investors predicted.
Nyan Cat and other meme-driven artwork going for millions was evidence that the industry was in a bubble. Vitalik Buterin himself said he could have never predicted the wild success of NFTs; he in fact thought the idea was pretty much useless.
In other words, NFTs have many hurdles to overcome before they’re safely established as a legitimate industry.
However, if more tokens release with utility then they just might catch on and change the creative world as we know it.