What are NFTs: A Beginners Guide for Non-Techies

What's an NFT(non-fungible token)? I'm going to purposely avoid technical jargon. I will not be talking about blockchains, cryptocurrencies, ERC-721's or Metamask.

The aim will be to write in a way that almost anyone will be able to read and have a general idea of what an NFT is.

If you'd like a full in-depth write-up where you can learn more here I would recommend reading this article from OpenSea. They are the largest NFT marketplace so they are one of the best qualified to talk about the technical details.

If you have no idea or are not that sure what they even do you're in the right place

Here's what this short article will cover:

1. NFT is Like a Digital Signature
2. How you can steal a $69.3 million with a simple right click copy image
3. How a Bored Ape and Mona Lisa have more things in common than you would think
4. How NFTs could have prevented the Champions League Final in Paris shambles
5. 11 ways NFTs are being used in Industry right now

Let's begin

NFT is Like a Digital Signature

You can think of an NFT as a digital signature. The main usefulness is that it shows your record of ownership over a digital item.

Right now you may or may not have heard about NFTs that have sold for millions and even celebrities endorsing them with the example of Bored Apes.

This most expensive NFT ever sold was Beeple's, Everydays: The First 5000 Days – $69.3 million (38525 ETH). This piece puts the artist among the top 3 valuable living artists.

Okay so if it is just a digital image? Anyone can just screenshot it and own one.

Yes, this is technically true. So what makes your copy worth $0 versus $69.3 million?

The value comes from digital ownership and this signifies the importance of NFTs or that digital signature which proves who is the rightful owner.

This isn't a new concept though and is already happening with traditional art.

You can steal the Mona Lisa too.

Millions of people go to view the Mona Lisa in the Louvre. You can buy prints, take a photo, and copy images from Google to be printed and put on your wall. In the end, there is only 1 Mona Lisa that people will want to go see which is the verified original.

Art replicas are a big black market industry. This is where highly talented artists recreate artwork to sell. This is a growing problem and millions are spent to prevent these fakes from being sold. Sotheby has even brought in their own forgery detective to catch these perfect fakes.

The Frans Hals painting, Portrait of a Gentleman, was supplied to Sotheby’s by Mark Weiss. It sold for a reported ￡8.5m ($10.8m) but was later declared fake. Photograph: Sotheby's?

The replicas need to be examined by art specialists to determine authenticity. NFTs are essentially the way that people can determine authenticity like a digital signature on the Mona Lisa.

Okay, so these digital signatures prove ownership. But who really cares about Ape jpegs?

Bored Ape Yacht Club, Azuki, CryptoPunks. People are spending millions on these collections but why should anyone else care or maybe more interesting why would any businesses care?

There has to be a reason why Disney, Starbucks, and Luxury Fashion brands are entering the NFT space.

So why are they interested?

Aside from being able to monetise a jpeg which is low cost and high profit margins.

It's the technology behind NFTs is what is the most exciting part.

The ability to attach digital ownership to nearly everything opens up new ways of business which companies are now rapidly seeing and starting to adopt.

What would that look like in reality?

Let's give an example of where NFTs could have been used and also go into current uses and potential future uses of this technology.

Champions League Final in Paris Case Study

You may remember hearing or seeing the chaotic scenes from the champions league final this year.

The issue came from people that got into the stadium with fake tickets and supporters who had official tickets who could not get inside.

If each of the tickets were issued as NFTs and were purchased by the customers then this would not have happened.?

Each of these NFT tickets would have been signed by the purchaser and associated with their wallet.

Entrance to the stadium by verifying the NFT is in the holders' wallet would prevent any fraud.

Okay, let's answer the elephant in the room.

Hindsight is 20/20 but how are you going to get everyone to have a crypto wallet and make the transaction to purchase the NFTs.

As mentioned this space is still new so development is still being made rapidly every day.?

But like any great technology that is currently in use today, this could work in the background so most people wouldn't even know how it works.

In this scenario you would just:

1. Create an account. (Which also creates a wallet)

2. Purchase your ticket in your normal curreny (native currency would get converted into a cryptocurrency to mint the NFT)

3. You would get a confirmation of your digital ticket and possibly download and sync to an app.

4. When you arrive at the stadium you would scan your digital ticket in-app (the scan would verify the NFT is linked to the wallet address)

5. This gains you access to the stadium without even realising you owned an NFT or made a cryptocurrency purchase.

11 ways NFTs are being used in Industry right now

Let's run through some other real life use cases all of which are currently being used.

• Gated access. Only be able to access a website, software, or app unless you have the purchased NFT. This idea opens up anyone being able to create a Patreon type website.
• Ticketing Events business online or physical as illustrated with the Champions League.
• Art Proof of Ownership i.e Beeple
• Collectibles like pokemon cards but digital
• Gaming in-game items those character and item skins or play-to-earn games.
• VR worlds - selling a house in the metaverse as an NFT. Virtual land ownership.
• Memberships - access to your gym, your Starbucks loyalty card etc
• The music industry - giving more profits to artists through private ownership of their work
• Fashion industry - clothes in the metaverse or a combination of the Digital-Physical known as Phygital.
• Luxury goods - proof of authenticity with the digital certificate of ownership. Selling an NFT that gives you access to a Rolex watch to prove it's authentic.
• NFTs for e-commerce. Purchasing an NFT design that gives access to a real product that the design will be printed and shipped to you. This is what I am currently developing. Allowing the buyer to own unique products that only they own with also the potential of being able to sell their NFT in future which holds its value as an investment and allows access to someone else of this product reducing over consumption and fast-fashion.

What's next for NFTs?

NFTs are still a new technology, and people are still discovering and playing with them. However, we are seeing big players starting to use this technology, so there is no doubt that there will be a more interesting development in the future.

It is still new and at the moment it isn't user-friendly to be mass adopted. But like most technology around Web3 I see the future use cases of NFTs will be more behind the scenes and everyday users will not necessarily know or care what's happening beneath the surface.

NFTs have a lot of potential, and we can only imagine what they will be able to do once they are more widely adopted. So far, they have been used for things like digital art, gaming, and collectables.

However, as the technology continues to develop, we may see them being used for more complex applications. But what is for sure is that we will continue to see the use of this technology more and more over the next months and years to come.

FAQ's

Are NFTs bad for the environment?

• Ethereum was a bad culprit for the energy required to create an NFT. But with the reduce Merge event they reduced its energy consumption by over 99%.
• An alternative solution Solana uses less energy than a couple of Google searches.

Did this article help you understand NFTs a bit more? If there is anything I missed or that you would like cover feel free to comment or you can DM me. I’d love to hear your thoughts on NFTs.

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