• Emma Buryd

NFTs Explained By Someone Who Learned What NFTs Are An Hour Ago

NFTs and cryptocurrencies are like paying taxes, we all think we understand them until someone asks us to explain them.

When you read articles or watch videos about NFTs we will inevitably come across complicated and confusing language. There is quite a bit of gatekeeping in the NFT community and they don't make much of an effort to explain it simply.

So I will explain to you what NFTs are and what they are for with the same words that were used so that I would understand it.

Obviously, I'm going to make mistakes and say the wrong things, but this article will help you understand NFTs at least enough to engage in conversation.

What are NFTs?

The first common misconception is that NFTs are images, videos, or GIFs. NFTs are digital contracts that are embedded in digital assets.

In case you don't know, the acronym stands for Non-Fungible Token. Which means that it is a token that you cannot funge.

So think of NFTs as code that someone programs and adds to any kind of digital asset. These work by blockchain technology, the same one that cryptocurrencies are based on. That is why both concepts are connected.

What are NFTs for?

For now, there are 4 uses for NFTs and why they have become so popular. These are 4:

  • Art

  • Collection

  • Gaming

  • Community

NFTs can function as a certificate of authenticity. Imagine buying an ordinary electric guitar, but then you add a document certifying that that guitar was played by Jimi Hendrix on his last tour. That guitar is no longer an ordinary object.

NFTs allow us to do the same with images, videos, mp3s, GIFs, etc. Although you can replicate any of those files infinitely many times, only one of those has a built-in NFT that verifies its authenticity.

That's why Jack, the founder, and ex-CEO of Twitter, was able to sell his first Tweet.

Although any of us can find that tweet and take a screenshot, there is only one NFT in the world with the authenticity of that file. That's why it sold for millions of dollars.

This is why artists can now sell their works digitally. They can create a unique piece and add value. Whoever buys an NFT art not only pays for the image, he pays for the certificate of authenticity.

On the other hand, video games like Axie Infinity have taken advantage of NFTs to integrate them into their gameplay. Just as you have items in games like Fortnite, where you buy skins, NFTs allow you to have unique items integrated into the game.

Finally, the use that I think has created the most hype in this world is the concept of community.

Think of NFTs like country club stocks. These are finite, scarce, indivisible, and transferable. These can be used as club membership.

That's where all the hype around CryptoPunks and Bored Ape Yacht Club was born.

People who buy these NFTs pay to be part of an exclusive club. Those with a BAYC NFT can attend private events featuring the likes of Stephen Curry and Jimmy Fallon.

The value of these memberships is given by the community itself. The benefits that you get from owning an NFTs are what will cause its value to increase or decrease.

That is basically it. Those are the keys to understanding NFTs, at least to impress a few people at a barbecue. Surely there are important things that I have not mentioned but the Crypto bros will take care of making it known in the comments.

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