Non Fungible Token.
To be fungible means that something can be replaced by another thing exactly like it.
A one dollar bill is a fungible note.
A bitcoin is a fungible token.
Any one bitcoin is exactly as valuable as any other bitcoin.
NTFs are NON-fungible.
Meaning they are completely unique.
No other thing exists that an NFT can be replaced by.
The NFT itself is a little piece of data that lives on a blockchain.
It is unique, and it can not be changed or broken up.
The SUPER oversimplified explanation of a block-chain is that its a ledger of every
transaction that has ever happened for a particular cryptocurrency.
The name comes from the fact that, for instance with Bitcoin, every ten minutes or so, every
transaction that takes place on the bitcoin network, every bit of bitcoin that moves from
one wallet to another, or gets bought or sold is sent to a node where it is duplicated and
sent across a huge network of other nodes and mining computers.
A node is just a computer who’s sole purpose is to collect, validate and redistribute this
data.
The miners package these transactions into “blocks” where they are sent back to the
network of nodes to be verified.
One a consensus is reached concerning that ten minute block of bitcoin activity, it is
then hooked to a chain of previous blocks of verified data, all of which are identical,
again across thousands of computers throughout the world, making it totally immutable, uneditable.
This chain of blocks, is the blockchain!
You cant edit it BECAUSE of these thousands of computers who are always watching the data.
These computers dont know one another and are quite literally all over the world, hence,
decentralized.
If one copy of the blockchain doesnt match the rest it is rejected.
Even if someone were to manage to hack a thousand computers in a single instant to replicate
the attempt at creating a fraudulent version of a block - the 13,000 OTHER computers that
make up the network would take notice and reject the change.
All this to say, the blockchain is currently unhackable - NFTs live safely ON the blockchain!
What I think people so far aren’t always understanding is when you buy an NFT of let
say some picture of a thing..
What you bought was not that picture.
You’ve bought a small piece of data, not the picture itself.
The picture is hosted on some computer somewhere, and the small piece of data will point to
it.
Thanks to the blockchain, there is absolute conclusive proof that you are the owner of
the NTF you bought, and every time you sell it to anyone else, every transaction is recorded
onto the blockchain forever.
In fact, thats where a lot of the value of NFTs as art is coming from.
If I make a picture of a duck and put it up for sale as an original NFT it will be close
to worthless.
I simply dont have enough clout for anyone to care.
BUT, if Dwayne the Rock Johnson buys my picture of a duck on a whim one day, and then resells
it - now its no longer just some picture of a duck - its an NFT that Dwayne the Rock Johnson
used to own and THAT makes it worth lots and lots of money.
The traditional art world works in this same way, its just MUCH MUCH harder to prove previous
ownership.
Its often long lines of hearsay or ‘evidence.’
Theres even a bit of a ‘scandal’ happening in my town of Orlando Florida over a collection
of Basquiats at the Orlando Museum of art where people are saying theyre fakes, and
the man with the collection is lying about who owned them previously.
With NFTs, that would all be laid out perfectly on the blockchain!
Also, NFTs are not art, by any definition.
Thats just how people are currently using the technology most prominently.
Just as easily, that little piece of data that you buy when you buy an NFT could represent
a ticket to a monster truck rally.
You would be the indisputable owner of the ticket, and you could sell the ticket to someone
else who would then be able to use it as the tickets new owner.
Something that can be written into the code is that any time there is a sale of an NFT,
the original owner receives a royalty.
Using this feature could bring back SO much value into the hands of a musician that is
often lost to ticketing companies or scalpers.
If Dua Lipa puts on a concert and she sells 50,000 NFT tickets to it - even if some scalper
gets their dirty hands on all the good seats and then resells them for 5x their original
value - Dua Lipa will get paid for the original purchase and then her cut again of the inflated
scalped price!
On top of that, no one would be able to make forged copies of the ticket since the blockchain
can instantly tell you that it originated from Dua Lipa and that it is authentic.
For this same reason, contracts can be written as NFTs.
Logins to websites can be minted as NFTs - it may be soon that login and password becomes
less and less common and instead you’ll be able to ‘sign in’ by just having the
right NFT in your wallet which is running on your phone or computer.
Gary Vee is selling access to his time, through a collection of NFTs where the holders can
come to his conferences for the next three years.
That makes owning them AND selling them valuable.
So much utility is possible with these and we are just starting to become familiar with
the term.
For now, though, for the most part, its a gold rush, cash grab by celebrities and their
art collections.
Maybe we need to start up a SpaceWarehouse-conference with a group of NFTs that gets you in to the
warehouse where we’ll meet and discuss the direction of my youtube channel.