At Grypto, we try to take away the mystery that lingers around crypto and NFTs, as it turns out to be quite tricky to find a reliable source of information that doesn't immediately dive into the technical stuff. A dangerous trap and a mistake often made when trying to explain NFTs and cryptocurrencies to beginners is the immediate pitfall into difficult jargon and complex explanations. Naturally, when you're familiar with a subject, it's difficult to imagine that someone else isn't in the same position as you. This seems to be a big issue specifically occurring around topics like crypto, NFTs, and blockchain. This results in a large group of people that loses interest, simply because it seems like too much of a hurdle to get into the basics. And that's a pity, cause the technical stuff behind crypto and NFTs have great potential for future innovations in finances, governments, and much more.
In this blog, we won't skip the basics. On the contrary, we try to explain the use of NFTs without diving into the technical stuff at all. After all, there's enough to find on that topic already. So let's get started!
NFTs in other words
NFT stands for "Non-Fungible Token", but you may have already come across that term in your search for answers. However, it doesn't make it much more clear right? Because what's a token? And is "fungible" some kind of mushroom? To answer that last question right away: no, it's not.
What does "Non-Fungible" mean?
The term "fungible" originates from the Latin verb "fungi", which, unfortunately for mushroom fanatics, has nothing to do with the noun "fungus" and its plural form "fungi". The verb "fungi" means "to perform" and relates to something that can be exchanged into something else of the same kind. Like a ten-dollar bill: no matter what ten-dollar bill you have, they all have the same value.
Something that isn't fungible is, for example, a painting. It can't be traded for an exact same copy of the exact same value. While an original Van Gogh painting can have many copies, they are definitely not of the same value. The original version probably costs a few million dollars, while you can buy a replica for your dining room for twenty bucks.
What's a token?
Now that we got the "Non-Fungible" part out of the way, let's look at the "Token"-part. The term "token" originates from the old English term "tacen", which means "sign", "symbol", or "evidence". That's also exactly what "token" in "non-fungible token" stands for: an object (or symbol) that represents something else. In the case of NFTs, the token is the "registration" on the blockchain that says that you are the owner of a specific digital asset or artwork. In non-internet terms: the token is the receipt you get when buying that original Van Gogh for a few million dollars. With that receipt, you can show other people and potential future buyers that you paid for the painting and therefore are the official owner of it.
URP/URO: a Unique Representation of a Purchase/Ownership
Let's wrap it up here and turn the term "Non-Fungible Token" into something that makes more sense. Get ready for URP or URO: "Unique Representation of a Purchase/Ownership". Sounds less like some kind of Italian-Asian fusion mushroom risotto dish than Non-Fungible Token, right? I hope it also gave you a better idea of what an NFT is and what it means to be an owner of it. In the next part, I'll try to give some insights into why some people are so immensely hyped, almost obsessed, about NFTs.
So, what's the fuss about?
Have a quick look at some NFT-related Twitter or LinkedIn accounts and you're thrown into a pool of hungry sharks. Or if you really want to feel like an outsider, join one of the many NFT communities on the social platform Discord. Even for someone who gets the basics of NFTs, joining an NFT Discord server feels like crying in the bathroom at a 2005 prom because everyone seems to be having fun except you. To get an idea of why these people are so hyped about something that can seem quite trivial to outsiders, let's have a look at some of the benefits of NFTs.
Increased security: Since our ownership of an NFT is registered on a public ledger (aka, the blockchain), they are safer and more transparent than, for example, a piece of physical art. Your token is registered on the blockchain, where blocks of similar transactions/tokens are connected to each other with a unique code (aka hash). While everyone can see the transaction, no one can meddle with it. In other words, no one can steal your receipt for buying a piece of art and pretend it's theirs.
Lower fees: Fees are usually lower on NFT marketplaces than they are on traditional online marketplaces. This is because they are decentralized and do not require middlemen to facilitate transactions and therefore request a service fee.
Independence: Because NFT marketplaces aren't centralized, they don't have to follow the same rules and regulations as traditional art marketplaces. This gives people more freedom and options when they want to buy, sell, or trade digital assets.
Investment: Instead of diving into the world of traditional art collecting and investing and visiting hundreds of exhibitions, you can do it all online from the comfort of your couch and perhaps make some money out of it in the long-term.
"But, I can just right-click the NFT image and save it on my PC. Why pay for it?"
This is an ever-going discussion between NFT fanatics and NFT deniers. And to be fair, it does make sense. Because, why would you pay thousands of euros for a digital image if you can also just save it on your PC and use it however you want? After all, becoming the owner of an NFT doesn't mean you also own the copyrights. You simply own the "original" image. To make sense of that, we have to look at NFTs as trading assets, rather than something we hang on the wall. Traditional art collectors don't necessarily buy a piece of art to hang in their houses. They might buy it because they know it might be worth a lot more in a couple of years and they can sell it for more than they bought it for. It's actually just as simple as that: you can invest in an NFT, perhaps showcase your NFT by using it as your profile picture on Twitter, and resell it once its value goes up.
Are you still in the dark after reading this blog? Or did you get convinced of the benefits of NFTs and now want to become an NFT vendor yourself? In that case, you're welcome to get in touch! We can provide you with more information on the basics, or partner up and sell your art on one of the many NFT marketplaces.