So what are NFTs without snidely replying, “non-fungible token“?
| What is a non-fungible token? A digital certificate of authenticity on a public ledger proving that the holder owns a one-of-a-kind digital (and sometimes physical) asset. | What is digital scarcity? Control over the abundance and existence of digital assets or resources. The record of ownership is generated by an immutable blockchain algorithm. |
| What is fungible? Interchangeable. You can exchange one for one, like one dollar for one dollar. | What is the blockchain? A fully transparent and immutable networked database that is not owned by any central authority. |
| What is non-fungible? One of a kind. You cannot exchange one for one like you wouldn’t trade one child for another (one would hope). | What is a token? A type of cryptocurrency that represents an asset or specific use. |
| What is digital authenticity? An immutable moment in time. Creations on blockchain cannot be changed. Buyers can trust they’re purchasing untampered originals because blockchain makes the data always available. | What is a unique digital creation? A digital creation (art, music, document) that’s been digitally signed by the creator, uniquely identified on blockchain, and which can only be owned by a single individual. |
NFTs were created and made popular by digital artists exploring the novel idea of digital scarcity.
Though the possible use cases for NFTs can — according to some — encompass the whole world, the most common use of NFTs to date has been the monetization of digital art and the celebration of digital artists.
NFTs empower artists to
- Prove they are the original creator and authenticate the digital file
- Sell art that would otherwise not find a market.
- Enable features that allow them to collect royalties on secondary sales.
- Explore entirely new, unexplored possibilities within the digital art realm.
NFTs enable collectors to
- Buy, sell, or trade digital art pieces that would otherwise be easily copyable.
- Support artists and a creative ecosystem that is pushing boundaries.
- Depending on the details, collectors may buy intellectual property rights or other unique benefits with the NFT.
What do NFTs look like?
Short answer: Anything. But for purposes relevant to MakersPlace and digital scarcity in terms of art and culture, NFTs can be the following:
Art
Digital and physical art across formats and styles can be owned in the form of NFTs
Music
Still quite nascent, the world of music NFTs will shake up the ‘20s like Spotify shook up the ‘10s.
Games
Players can earn, buy, sell, or create in-game assets and cryptocurrency.
Fashion
Digital apparel is growing in popularity, and NFTs are increasingly tied to physical pieces.
Collectibles
From profile pics to historically significant documents and moments, NFTs make digital life collectible.
Sports
Memorabilia lives on blockchain for collecting, trading, owning, and admiring.
Charity
NFTs incentivize charitable giving and create a social proof flywheel effect.
Access
Owners receive unique affiliation benefits for holding a given NFT.
What am I buying when I buy an NFT? What am I selling when I sell an NFT?
A limited-edition digital creation, signed by the creator.
Upon purchase, buyers receive the right to use, distribute, display (for non-commercial purposes) and sell. Buyers can access the high-resolution digital file to display digitally or physically while knowing that they have the authentic piece, verifiable on the blockchain.
Creators retain commercial rights to their work (unless otherwise stipulated by the creator). However, creators shouldn’t issue more tokens of the same creation once they are tokenized. Increased visibility in popular culture can increase value, but the excessive proliferation of editions can and will decrease value.
Caveat emptor
Losing access to your wallet is as simple as forgetting your password. If you lose your private key — a random string of 12 or 24 words — you will never get it back.
Security best practices
- Don’t store your private key digitally. Write it down and keep it in a secure place.
- Don’t give your private key to anyone. Ever.
- If anyone ever asks for your private key, scrupulously inspect every piece of text for typos or instances of the person trying to hurry or distract you. Then remind yourself, “Oh yes, I should NEVER GIVE MY PRIVATE KEY TO ANYONE, EVER.”
P.S., Don’t give your private key to anyone. Ever.
