What’s an NFT? Explained Like You’re 5

Throughout history, technology and culture have been two of the strongest joining and transformative forces shaping identities, societies, and nation-states. NFT's, as both a technological advancement and a cultural renaissance, are no different.

But what are NFT's, really? We've see the acronym everywhere, we've seen everyday artists and billion-dollar brands alike launch NFT projects, we've experienced the hype and FOMO from our woke crypto friends turning huge profits and talking about it on their Instagram stories – but yet, the meaning of NFT still remains shadowy and misunderstood due to its blockchain nature.

The shocking rise of NFT's has caused many to doubt this asset type, and think of it as a passing trend. People were quick to say that "NFT's were dying" after a rocky beginning of 2022 in NFT's, and a tough month of May in the crypto markets. But now, NFT's are outperforming crypto. And if you have not already, it's time to start paying attention.

So, why should NFT's matter to you? What does NFT even mean? We'll explain it to you like you're five. Read on.

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What does NFT stand for?

NFT is an acronym for?non-fungible?token.

What does “non-fungible” mean?

Non-fungible means non-interchangeable and completely unique. You cannot replace something that is non-fungible with anything else, because it's one-of-a-kind.

What is an example of something that is fungible?

A fungible asset is something that is interchangeable with an asset of equal value. A great example of a fungible asset is a Bitcoin. The value of the 1 Bitcoin you bought in 2021 on Coinbase is equivalent and interchangeable with the 1 Bitcoin held in your friends wallet in Florida since 2011.

What is an example of something that is non-fungible?

The cool 3D animation you made for fun last week, the digital painting you created on your iPad on the airplane, that really great food picture you took at your dinner date, or the awesome video you took at your friends wedding are all real-life examples of non-fungible assets. Even if someone tried to create a replica of your work, or took a video or a photo from the same vantage point, no one could ever make an *exact* duplicate of the work you created, no matter how hard they tried, because it is uniquely yours.

Okay, so then what is a non-fungible?token?

Non-fungible tokens can be created from any unique digital asset. Think images, photos, videos, audio files, 3D files, tweets, websites, etc.

To turn your original digital asset into an non-fungible token, you take your one-of-a-kind 3D animation you made for fun last week, or that really great food picture you took at your dinner date, and mint it into a token.

So what does minting mean? As a kid, did you ever go on one of those field trips to the Mint, the place where they literally create coins??Minting a non-fungible token is the same concept as minting a coin. At the real life Mint, in goes a piece of metal, out comes a coin. When it comes to NFT's, you put your unique digital asset into, for example, Supernovas 1-click minting engine, and out from the other side comes your unique digital asset turned into a token.

Now, let's dive into the more complex side of this now that we have grasped the basics.

So, how do NFT's actually work?

Non-fungible tokens are unique digital assets, meaning that they are literally pieces of data stored on a digital public ledger, i.e., a blockchain. Blockchains, and the data transcribed in their ledgers, are immutable and publicly accessible, meaning that everything is permanent, 100% public and fully transparent to anyone.

What does multi-chain marketplace mean for NFT's?

Supernovas, for example, is a multi-chain NFT marketplace, simply meaning that creators can choose to mint their NFT's on either Ethereum, Solana (soon), or DeSo blockchains. When you mint an NFT on Supernovas, you choose what blockchain to mint on, and your NFT data (the original creator, the history, who owns it, etc.) will be written onto the digital ledger of that blockchain.

Are NFT's crypto?

Non-fungible tokens are?similar?to cryptocurrency in the way that NFT's are stored on a blockchain and are like a cryptographic token (i.e., Bitcoin, as mentioned earlier), but they are non-interchangeable, so you cannot exchange non-fungible token's 1:1.

What do I get when I buy an NFT?

NFT's are kept as pieces of data stored on the blockchain (typically only a few bytes in size, and usually a URL?or a serial number). When you buy an NFT, you become an owner of this piece of data stored on the blockchain, where your ownership is publicly verifiable. It does not matter if anyone "right clicks and saves" that same image (in fact, thank them for the free advertising), because you can verifiably prove on the blockchain that you own the original asset. We love a status symbol.

Why would I want to own data on a blockchain?

Outside of just appreciating the art, value, or the utility that could perhaps come with this NFT, you also get some social clout. Just because something is online and you cannot hold it in your hands does not mean it is not valuable.

For example, NFT's are valuable status symbols in the exact same way that having a verified Instagram profile with millions of followers are.?Verified profiles with significant following are extremely valuable even though they are not tangible. In an increasingly digital world, especially in the midst of a (never-ending) pandemic when much of the world is still working from home, being able to connect online with like-minded people, and get validation is important. Showing that you own a cool NFT is the modern-day equivalent of going to sharpen your pencil in the middle of class so you can show your cool new outfit to the class.

Why would I want to turn my art into an NFT?

When you sell an original painting, you make a profit from the first sale, but never from any of the sales that come after. With NFT's, you not only earn from the first sale, but you earn a percentage of each secondary sale - forever. NFT's are the modern-day way to earn easy residual income.

Additionally, by turning your art into a non-fungible token, you preserve your legacy. Today, if you post your work on Instagram, there is no guarantee whatsoever that your kids, grandkids, great grandkids, or anyone 200+ years from now will be able to access your art due to being stored on a centralized server that is not under your control or ownership. By minting your art into an NFT on Supernovas, for example, your files are stored decentrally on the Arweave permaweb, making it so that your legacy will always live on. This is essential for the long-term value of your NFT.

Also - ownership!?To sort out intellectual property agreements in the non-crypto world, one would have to work with an arsenal of lawyers to navigate through endless contracts. With non-fungible tokens, all that you need to verify that an asset is 100% owned by you is the blockchain.

Additionally, by minting/selling or buying an NFT on Supernovas, you earn rewards every single time, making you Supernovas owner and able to make governance decisions for the platform while being able to capture the value you create. Total win-win.

How much money can I really make from NFT's?

Well, technically, millions. For NFT artists, the record for the most expensive NFT ever sold is held by?Beeple, whose art piece “EVERYDAYS: THE FIRST 5000 DAYS” (a collage of 5,000 of Beeple’s earlier artworks, showing his progression and growth as an artist) sold for $69.3 million. Also, if you minted the NFT, you will earn lifelong royalties on that NFT anytime that asset is sold from collector to collector.

Anyone can also trade NFT's for a huge profit. Many people look at NFT's like stocks, and buy them low, and sell them high to turn a profit.

But as always, DYOR.

Growth in the NFT space has been on a steady incline since 2020, and shows no sign of slowing down.?Despite being in a bit of a crypto winter right now, don’t you still wish that you got in on Bitcoin in its early days? These are still the early days of NFT’s, and the best time to get in was yesterday. The second best time to get in is right now.

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