What is an NFT?
Updated: Apr 6
What does NFT mean?
NFT stands for non-fungible token. This basically means it is unique. A common explanation is with money. You can trade a $100 USD bill in for 5 $20 bills, 10 $10 bills, etc.. All of these have the value ($100), so they are siad to be fungible.
A non-fungible asset is an item that isn't like the others. For insance, as investopedia illustrates in their video, pants aren't all alike. They have different styles, designers, etc..This makes them non-fungible (to a degree).
NFTs are non-fungible, in that, no 2 are exactly the same. This creates scarcity (you set the number in the world) and a "certificate of authenticity" which has a record that can't be changed (thanks to the blockchain's immutability, more on that later) so you can follow the history to the creator of the asset and prove you have the authentic version.
Can't People just Save the File?
Yes they can, but would you say a photograph of the Mona Lisa, or even a great knock-off version on canvas, is worth the same as the original hanging in the Louve? Of course not!
The reason we know the Mona Lisa is real, is because of "provenance" or the proof it came from da Vinci (its creator). This shows the ownership. NFTs' provenance can't be faked, it is basically impossible at this point. NFTs are the end-all-be-all of provenance in the digital world as anyone can publically see the chain of ownership.
Due to this ability, the artist is able to get royalties on secondary sales, not just the inital sale!
NFTs work on the blockchain
The blockchain is most famous for its first rock star, Bitcoin. The rise of bitcoin is just one example of a blockchain, one that is used as currency.
Without getting too technical, the block chain can be thought of as a series of blocks in, you guessed it, a chain. The special thing about these boxes though is that they can only be opened and added to with a certain key. To add anything to this blockchain, you need the key and for everyone on the network "mining" to prove (through math) your key is the right key to add another block to the chain. There is no "taking your word for it", it is just brute force math and the community verfication that will allow you to access & add to the chain of blocks.
The important part is that this is an immutable process. In other words, it can't be changed after the community of miners have agreed it is valid. This eliminates fraud on the blockchain and creates a system transparency to avoid corruption.
The process of mining takes tons of energy, for bitcoin that is turning into a real problem (in Feb. of 2021, Bitcoin mining consumed more electricty than Argentina!!). This energy costs money, so the miners are rewarded for their hard computational work with tokens in return (which are logically, Bitcoin for Bitcoin mining). This makes a fee paid to interact with the block chain fluctate with demand since there are only so many miners fighting for that fee and to be first to confirm the authenticity of your key. This is also the reason we have fluctuating fee structures for NFTDealr.com.
NFTs are traded using Ethereum's blockchain
Like Bitcoin, Ehtereum is on a blockchain. However, Etherium uses "smart contracts" which are basically programs that get run (and added to) by accessing the blockchain.
Where Bitcoin traded tokens ("coins") around, Ethereum allows whole programs to be put on their blockchain. Interacting with this Ethereum blockchain can add things to it. For instance, you can add an item with a description and other atributes to the blockchain and that, in very simple terms, is an NFT. Fees for mining Ethereum are called "Ether" and are what NFTs are paid for with as well as the rewards to miners.
The fee for mining Etherum is called "gas" and this fluctates with demand.
NFTs are autioned and sold on numerous sites
We fell OpenSea is the most friendly to local artists and focus on it. However, there are others such as MakersPlace, Rarible, and many others. These sites handle the auction/direct sales process and NFTDealr handles this process for you, free of charge until your piece or pieces sell.
NFTs require a community and leg work
Just like with physical art (which can be coupled with this digital only NFT), you need to promote things. There are a lot of NFT collectors and thanks to the Crypto wave, we've had a lot of new millionaires born that collect these NFTs. However, they are in a bunch of different places. You need to join these discussions, get a following, and contribute for them to notice and purchase your art.
This is where NFTDealr's true value lies. Through combined efforts of local artists helping each other out and us handling the techincal work for those that want it, we can harness the power of the many and grow in our ability to help local artists sell and offer their NFT (and physical) art over time. Be it traditional art, graphic design, photography, sculptures, music, or anything else considered art, we can succeed together!
What is success in NFTs (how much money we talking?)
The popularity has been growing and this is a great time to get in. The market is ~$338M in 2020 as opposed to only $14M in 2018! In fact, the biggest splash yet (as of this writing) was Beeple selling his "Everydays: the First 5000 Days" for $69M (and that buyer said he'd have spent more!). Banksy, the graffiti artist turned art shreder sold an NFT and burnt the physical copy in order to send all the value into the only authentic original, the NFT.
There are numerous new stars being born that can be found on any platform offering them for sale and auction (or people to make offers on them).
Create great art and people will find you (and we will try our hardest to help!)
NFTs offer a way to assure autheticity in the digital world.
Just write NFTDealr@mercuryplatform.com we will answer as soon as we can.