nfts are a new type of digital art that simply exploded into the scene in the
last couple of months. This video clip of a spinning shoe sold for $38 thousand dollars,
and this animation of a rainbow cat sold for $590 thousand dollars this image of a cyberpunk
sold for $1.5 million dollars and if you think that's something this clip over here sold for $6.6
million dollars. Absolutely crazy, if you're completely confused you're not the only one.
After all these are just images and videos, i mean they're available for free on the
internet. In fact you're watching them right now for free on youtube.
Why would anyone spend millions of dollars to buy these digital assets? Well i dug into NFTs
to wrap my head around what makes them unique what they are, how they work, how people are
making millions of dollars from them and how other people are getting burned. Let's dig in.
So NFTs are called non-fungible tokens, what the hell is fungible, fungi? Fungible... Fungible
it's not a word we use. Now if you look at a dollar bill a dollar bill is considered fungible
because you can take one dollar bill replace it with another dollar bill and even though it's a
different dollar bill it's still the same thing it's still worth the same and you can change it
for a different dollar bill and it's still a dollar bill that really means it's fungible it
means you can trade one for another now dollar bills are fungible. Bitcoins are also fungible
you can take one bitcoin trade it for a different bitcoin and it's still worth a bitcoin it's still
the same thing as far as you're concerned now what is non-fungible? A piece of original art
is non-fungible in the physical world whether it's a Picasso, a Leonardo da Vinci, a Mona Lisa.
You take a unique piece of original artwork and there is only one. You cannot funge it, you cannot
replace it with another piece of artwork and NFTs fit that exact same space. They are digital,
but they are non-fungible. Meaning that they are not replaceable they are entirely unique. So this
is really unique and really exciting for the first time you can create scarcity with something that
is digital. Traditionally, if something is digital you can copy it over and over and over again and
it's the same exact thing well NFTs allow you to make something that is really truly original and
unique you can only have that one unique signature of authenticity and that's what makes it special
if you're still confused take the simple example of pokemon cards. The value of a pokemon card
isn't in the paper or the ink that it's printed on it's in the rarity and collectibility of that card
and that's exactly what's going on with NFTs and cryptocurrencies as well. This adorable little
kitten is called a crypto kitty and it was one of the very first NFTs that were out there and the
idea was that you could collect these crypto kitties by spending cryptocurrency on them
and trade them like trading cards and much like pokemon cards in the physical world you can
trade and collect these cute crypto kitties in the digital world well the team that developed crypto
kitties is back at it again and they developed a new nft called nba top shots where you could
buy and trade digital cards with players showing off their top moves this move of lebron james sold
for over two hundred thousand dollars and the cards were an instant hit because you could go
buy an nft and nba top shots made it really accessible you didn't really need to understand
a lot of the cryptocurrency ethereum and all the other buzz words you could really sign up to the
site use a credit card and buy a pack of cards for 20 bucks and then if one of those cards was
particularly valuable you could really have a hit on your hands and so it became an instant
sensation a lot of competition for these cards and instantly a marketplace was formed because
these cards were both collectible and rare crypto kitties and nba top shots is a way to
get into the space and it may be a little bit more accessible but as you get deeper into nfts
the technology for buying these things is a little bit complicated now other nft artists are trying
to make their work a little more accessible by using traditional auction sites like christie's
one digital artist named bible has been making digital art for the last 15 years he's made most
of his work available for free online and he's been posting an image every single day for the
last 5 000 days he's created a following within the digital art community so when he decided to
create an nft his community took notice there's a lot of buzz around nfts and there's a whole market
being flooded with brand new nft art a lot in fact i think the majority of nft art is going to end
up being worthless so just be really careful if you're shopping for nftr or trying to get into the
space now so what makes this cryptokitty worth of thousands and these other images worthless well it
comes down to the reputation of the artist and the desirability in the community if the community is
really excited about the artist if the community is really excited about the particular piece
of art it creates more value what makes the mona lisa more valuable and more important than another
painting you could find from another artist it's the rarity and reputation of that artist
so if you're an established artist celebrity major brand musician your fan base may be really
interested in your digitally authentic piece of art and maybe an nft is a right way to go about
it but minting nfts can be expensive both in terms of electricity and resources so just proceed with
caution especially if you're a new artist and haven't yet established that fan base similarly
if you're buying nfts to make money or flip for a profit rather than as an art collector or a
fan trying to support the particular artist you want to be careful that you're buying something
that has long-term demand and long-term liquidity because lots of nfts may be inflated in the short
term and if you're buying an nft and aren't really a fan or digital collector you may not be able to
find a digital buyer in the future so just make sure you understand where you're buying and if
you're a collector or fan this is just a new great way to support your artists and musicians directly
69 million that's absolutely crazy when i started this it was listed at 3 4 and i thought that was
crazy well NFTs are definitely here to stay we are just at the beginning of this and this is why
people are getting so excited it's absolutely nuts if you're interested in the space definitely look
for artists that you want to support by investing in their art because this is a new way to support
artists musicians and people who are creating amazing work until next time i'm Greg Raiz.