What is a NFT ?
NFT stands for Non-Fungible Token - it is a digital asset with a unique identifying code. An NFT is created, or “minted”, from digital objects such as electronic files representing artworks, collectibles, music, videos, avatars or game skins. NFTs are saved, or “reside”, on a blockchain - a distributed and public ledger recording transactions and guaranteeing transparency and immutability. NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.
What do NFTs have in common with crypto currencies ?
Each NFT is built using the same kind of programming as crypto currency. However crypto currencies are “fungible” (they can be exchanged for one another) and they are also equal in value— one Bitcoin is always equal to another Bitcoin. NFTs are different. Each has a digital signature that makes it unique and impossible to be exchanged for or equal to one another (hence, non-fungible). When NFTs are bought and sold online, they are frequently paid with crypto currency. However there is no necessary correlation between these two categories of crypto assets. And it is now possible to pay for NFTs with standard credit cards.
What’s in it for artists and creators ?
Blockchain technology and NFTs offers creators a unique opportunity to monetise their artistic production. For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, they can sell it directly to the consumer as an NFT, which allows them to retain a substantially higher percentage of their profits. In addition, artists can program in royalties so they’ll receive a percentage of sales whenever their art is on-sold to a new owner. This is an attractive feature as artists generally do not receive future proceeds after their art is first sold. Crucially, NFTs are a means for creatives to be compensated for their work online. By purchasing a NFT you are supporting the compensation of artists online, as well as the future of a healthier, fairer digital economy.
What are the benefits of having a NFT collection ?
By collecting NFTs, you are acting as the curator of your own NFT gallery. Displaying the pieces in your digital wallet is similar to having an “art wall” in your home - NFTs are there to reflect you personality, interests and taste. NFTs are collector’s items - with “super-powers”. Each NFT has a unique digital signature on the blockchain, which means that every single piece is unique and traceable. This helps prevent fakes and confirms its value. It is similar to the provenance of a traditional work of art, that can be traced, as it trades hands from artist to collector, or museum. Often creators store inside the NFT some exclusive content which is only visible to the collector, adding to the desirability and collectability of that particular NFT.
What will I actually own by buying a NFT ?
When you buy a NFT you’re paying for a token that represents a unique item. In other words, you’re paying for a digital record of ownership that’s sent to your address or “wallet” on the blockchain. You will get exclusive ownership rights as NFTs can only have one owner at a time - all while the underlying digital asset remains visible to the public. Having ownership of this token means you can prove that you own a specific item and that the item you own is authentic. Crucially, it allows the collector to on-sell, or “trade”, each NFT potentially at a profit.
What will I NOT own by buying a NFT ?
Owning an NFT by itself does not automatically grant you any rights to its intellectual property. Unless otherwise agreed, the original creator of the work (who’s record is stored in the NFT) retains ownership of the copyright. It’s like buying a limited edition print of a photograph. As the owner of the print, you can privately display that art print; or on-sell that print, potentially at a profit. However you would not have any exclusivity rights over that photo. You wouldn’t own the copyright of the photo. You couldn’t sell your own reprints of the photo. And you couldn’t use the photo for commercial purposes.
How do I buy a NFT ?
In order to buy - and, crucially, store - your NFTs you will need a digital wallet. There are several available, one of the most popular is MetaMask, which you can download here https://metamask.io/download/ for free. When installing it on your browser, store your “seed phrase” securely and confidentially. Crypto assets are bearer instruments, so the holder is also the owner - for this reason it is essential that you control, protect and - if case may be - restore access to your digital wallet If you decide to pay for your NFTs in crypto currency, you will need to purchase it from platforms like Coinbase, Kraken, eToro - or even PayPal and Robinhood now. You may pay for your cryptocurrency via bank draft or using a credit card. Once you have purchased your ‘crypto”, you will be able to move it from the exchange to your digital wallet. Buying crypto is not always necessary to purchase NFTs - all main marketplaces accept standard credit card payments, alongside cryptocurrencies. However please note - your wallet will still be required to login, or “connect”, to the marketplace and to store any purchased NFT.