(bright classical music)
- [Joanna] This is my four-year-old son.
He's basically van Gogh.
- [Son] I've got a piece for the rainbow, mommy.
- [Joanna] His latest work might not look like much
but it's one of a kind.
At least, digitally it is.
Since, you know, I recently minted it
as an NFT on the Ethereum blockchain as one does.
Oh, and then I gave it to my mom
in an Ethereum wallet.
- What is this?
- I expect you have no idea what any of that meant.
And I didn't either until I embarked on this project.
♪ Now what the hell's an NFT? ♪
- The NFTs. - NFTs.
- NFTs.
- Yes, NFTs, or non-fungible tokens,
are the thing right now.
You've got artists selling NFTs of their works,
some for millions of dollars.
You've got musicians selling NFT songs and audio.
You've got brands like Burger King, the NBA
and Macy's making NFTs.
I could go on and on
but underlying that vast and wild assortment
is the same idea.
These are unique, irreplaceable
and verifiable digital things.
Okay, but why would you want one?
Hmm.
Authenticity, yeah.
Web 3.0, which is after Web 2.0.
To impress people.
It's a great though tough question.
And we're gonna get there
but first, you need to understand what an NFT is.
And the best way to do that,
make or buy one yourself.
Okay, so this is my son's art or what he calls.
- A masterpiece rainbow unicorn.
- You wanna call her NFT?
- No. - No?
- Boring.
- He made it with physical stuff
and then I quickly turned it digital.
I scanned it with my iPhone
and asked a colleague to animate some of the parts.
(horse neighing)
I ended up with this basic MP4 video file.
Sure, I could just upload it to the web
or some social media platform.
But there, nobody knows
that this is the real original thing.
That it's not just some digital copy.
There's nothing, no digital info
that says this is the masterpiece unicorn rainbow NFT
made by my son.
That's what minting it into an NFT does.
Yep, minting, which is the first piece
of jargon you need to understand.
Not these mints.
Minting an NFT is the process
of taking a piece of content, a JPEG, an MP4,
an MP3, some other file
and putting it on a digital registry.
In this process,
you're recording the stamp of ownership on a blockchain.
Jargon term number two, blockchain.
Now, this could be its own vide
but here's the simple explanation.
The blockchain is a software network
where computers run separate copies
of the same program.
The computers are linked
but no one controls the network.
It's called a decentralized network,
and it processes transactions.
It also keeps a ledger or database
with records of every single transaction that happens,
every transfer, every purchase, et cetera.
There are many blockchains,
including the one for Bitcoin,
the crypto you've probably heard all about.
Got all that?
All right, back to NFT making.
I decided to mint the great rainbow unicorn
using a service called XIP.
But to get started on XIP,
I needed to make a crypto wallet.
Think of like a real wallet
but only for the cryptocurrencies
and NFTs that you own for a specific blockchain.
For this project,
I went with the gold standard for NFTs, Eth.
It's the cryptocurrency associated
with the Ethereum blockchain.
MetaMask is one of the most popular Eth wallets.
Even though I was making an NFT,
I needed Ethereum for various associated fees,
which I'll get to.
So I bought some on Coinbase,
a crypto exchange where you can buy and sell lots
of different currencies,
and then transferred that to my MetaMask Ethereum wallet.
Finally, I was ready.
I gave the NFT a title and description
and then uploaded it to mint.
But before it was official,
I had to pay what's called a gas fee.
For this one, I went straight to Jeff Cluck,
the co-founder and CEO of XIP.
- On the Ethereum blockchain,
gas refers to the cost necessary
to conduct a transaction
on the Ethereum network.
It's the cost associated
with powering the network.
There are fees associated with other blockchain networks
but typically, Ethereum is known
to have some of the highest gas fees.
- So I paid the gas fee, .0333 ETH or $145.18, and boom.
(screen twinkling)
It's on the blockchain.
I could even confirm it
by going to Etherscan.io, which has a record
of every transaction on the blockchain.
Okay, so now I could do a few things
with this NFT masterpiece, including sell it.
And oh boy, are there a lot
of digital art NFTs for sale out there.
OpenSea, the biggest NFT marketplace
has millions of pieces.
And some of them have crazy high valuations.
Look at this Cool Cat #6133.
The highest offer was $26,000 as of making this video.
Why so much?
- Some of these new NFT projects,
such as the Cool Cats, these are some of the most in-demand,
most exciting NFT projects
that are out there right now
because of the way that they engage a community
around their project.
They have in real life meetups, events, people connect.
- I didn't sell or list the masterpiece unicorn rainbow
because I'm not in the art business
but selling is pretty easy
once you get to this point.
You go to OpenSea, set a minimum price
and see what happens.
Just like eBay.
Buying an NFT doesn't take as many steps
as making or selling one
but most sites, like OpenSea,
require you have a crypto wallet.
But remember, you're gonna pay a gas fee
on top of the price of the art,
which makes this all very expensive.
Instead of selling,
I decided to gift my NFT to my mom.
Daughter of the year right here.
Her very own MetaMask Ethereum wallet.
Yep, in that envelope,
I put her new MetaMask wallet information,
which contains her new NFT.
- What in the world?
- This is your crypto wallet,
which inside, it has an NFT made by your grandson.
- Why would I want this?
- And that's really the question of the year.
Why would you want an NFT?
After speaking with lots of people for this story,
I came up with a few reasons.
One, this is an elaborate, high-tech,
energy-sapping way to make money
because well, people and companies like money.
Then there's the idea of owning digital assets
in the metaverse.
That is the coming virtual world
where we work, and shop, and hang out.
Then there's that Cool Cats idea.
You buy an NFT to gain access to a community.
Another popular one is called the Bored Ape Yacht Club
with members like Steph Curry and Jimmy Fallon.
And then finally, you love an artist or brand
and you wanna own something unique from them,
which I can confidently say is exactly how I feel
about my favorite NFT artist.
NFT.
- NFPP.
NFT.
- [Joanna] What does it mean?
- Boop.