NFTs for Dummies: What is an NFT?

The value we bring to objects: Why some objects are way more expensive than others?

Have you always wondered what made products, paintings by famous artists for example, so inexplicably expensive???

The world-renowned Monalisa for example, which was painted by the great artist Leonardo Da Vinci, costs roughly $850 million, at present.??

At the back of our minds, we’d always come to ponder about what factors made the painting that expensive, because in reality, it’s technically just made up of old paint on a piece of paper – and it’s barely even bigger than our computer screens!?

In another example, have you ever wondered how some items sold at auctions cost significantly more than just buying at a random store???

If Lebron James of the National Basketball Association (NBA) decides to sell his favorite pair of shoes at an auction, a lot of people are going to compete for it, and it’s going to cost thousands of dollars more compared to just deciding to buy the exact same shoe at a Nike store.??

Factors that affect value?

The reason why some items are valued way more than others – in short, they cost way more, can be based on a lot of factors: provenance, condition, historical significance, popularity, prestige, or background of the owner, maker, or artist,? the medium that has been used, and a lot more.??

The number one factor is its authenticity.??

When an object is authentic, it means that it is irreplaceable.??

If an artist of today were to create a perfectly similar version of The Monalisa in the exact same material, color, design, and style, would it cost $850 million as well???

We all know that it wouldn’t. That’s because there is a certain psychological value that we have embedded into the original version, and no amount of replicating the artwork would suffice to match the original version’s uniqueness.???

If we buy the same exact shoe that Lebron James wore at a random Nike store, nobody would care. But if people were to know that your shoe was used by Lebron James that would now make the situation entirely different.?

This is where NFTs enter the picture.??

What are NFTs??

NFTs stand for Non-Fungible Tokens.??

Things still seem a little bit overwhelming? Let’s try to make the word fungible even simpler.???

Basically, fungible means replaceable which in turn, makes non-fungible mean not replaceable. NFTs are pretty much irreplaceable tokens.??

How about the tokens part? What are these tokens???

These tokens basically mean products, like the Monalisa and Lebron’s shoes mentioned earlier, but instead of tangible materials, these items are digital.?

“Digital? You mean, digital products on the internet?”??

Yes, digital products such as images, electronic art, gifs, videos, etc. on the internet.??

If the Monalisa and Lebron’s shoes are physical products that are authentic, then we have a digital counterpart for authentic products. Overall, these irreplaceable and authentic digital products are called NFTs.??

An example of an NFT is this very first tweet on Twitter before it was officially launched by Jack Dorsey, the CEO of Twitter.?

Do you know how much this cost when it was sold? A staggering $2.9 million!?

Now, what’s probably on your mind is “how can that cost millions of dollars?” I can simply copy the tweet or take a picture of it and it’s already mine now!” (just like what we did!)??

The simple answer to that is yes, you could, but as we have discussed in the first part of the blog, then it wouldn’t be the authentic, original tweet now, would it???

The value that has been brought to that original tweet would never be equivalent to other replicas (or screenshots) of that same tweet.??

Jack’s tweet is an example of an irreplaceable token – an NFT.??

So, there you have it, Congratulations! You finally know what NFTs are!.?

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Conclusion??

Simply put, NFTs are digital products that are most of the time in the form of an image, gif, png, electronic art, or video, which are authentic, original, and iconic.??

Just like the Monalisa, NFTs cost millions of dollars depending on the prestige it possesses.??

Other NFTs that are starting to take form at present are videos of some of the most NBA iconic basketball shots, stickers, and a compilation of edited pictures.??

Once you buy these NFTs, you exclusively own the rights to its downloadable content which is only made available to you and cannot be downloaded by anyone ever. How are they paid for? These are bought through blockchains.?

What are blockchains, you might ask? This is a topic that is going to be left for another blog to discuss.??

Stay tuned for our future blog on blockchains and how it works!?

In the meantime, subscribe to our blog to stay updated on more content like this, and leave your authentic thoughts in the comments below!??

Who knows, it might just become an NFT in the future!?

Read the original article here: https://blog.mangtas.com/nfts-for-dummies-what-is-an-nft/

References:

Clark, M. (2021, August 19). NFTs, explained: what they are, and why they’re suddenly worth millions. The Verge. https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq

Irving, I. (2018, March 13). These Are the 11 Things That Make A Painting Valuable. Culture Trip. https://theculturetrip.com/north-america/usa/articles/these-are-the-11-things-that-make-a-painting-valuable/

Laurence, T., & Kim, S. (2021, November 11). NFTs For Dummies Cheat Sheet. Dummies. https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/nfts-for-dummies-cheat-sheet-289345/

Leonard, K. (2022, March 18). What is an NFT?. Seeking Alpha. https://seekingalpha.com/article/4479683-what-is-an-nft?external=true&utm_campaign=14926960698&utm_medium=cpc&utm_source=google&utm_term=133537863789%5Edsa-1635534191729%5E%5E585727700549%5E%5E%5Eg