Bruh, what even is an NFT? You're telling me that somebody sold a photo of a collage that literally anybody can view online for free to somebody for $69,000,000??!
So yeah... that did actually happen. Whether you think that's lit or not, in 2021 NFT trading increased by more than 700% from April - September, and $41 billion in total was spent on the NFT marketplace. Those are some crazy numbers, yet 71% of American's still don't know what an NFT actually is.
NFT stands for "Non Fungible Token". Basically, they're unique digital assets that exist on a peer to peer network called the blockchain. The difference between cryptocurrency and NFT's is that NFT's are non-fungible, meaning they're unique and cant be replaced by something else. For example, the way a bitcoin could be replaced by another bitcoin, or a dollar for another dollar. Each NFT is assigned a unique digital address that proves ownership and allows it to be traded.
With the volatile price of cryptocurrency, you may be hesitant to slide down the NFT rabbit hole. However, NFT's have proven to be a more effective way to assign value to digital assets. Lets talk three myths about NFT's and why they have the potential to bring power back to the creators. I swear I'm not some frat bro giving you an ear beating at a party about NFT's. There is a lot of potential here.
Myth #1: Fr... are NFT's a scam?
- 2021 was the year of cryptocurrency scams. It seemed like every celebrity and their mother was minting their own coin and finessing their fans. Most of these coins don't exist anymore, or are worth almost nothing thanks to the shady activities of their creators.
One case in July of 2021 you may remember was a campaign called "Save the Kids." A cryptocurrency was created by now ex - FaZe Clan members with the purpose of helping children in need. After a hard sell by their favorite influencers, FaZe Clan fans dumped money into $KIDS, only to see its value plummet almost overnight. The alleged crime committed here is referred to as a "pump and dump." This is when the creators of a coin sell their portion of the cryptocurrency at it's highest value and dip with the profits.
Fraud is not a crime that is unique to NFT's. Any financial industry is doomed to experience some amount of fraud. It sucks that there's scamers casting a negative light on the NFT market (we're looking at you teejayx6), but this doesn't exclude them from being an important part of the future. NFT's have the power to decentralize the copywrite industry and decapitate those greedy streaming services, art dealers, and middlemen.
Myth #2: Can I sleep at night?
You may have heard that the process of creating NFT's has a negative impact on the environment. Ah, ah, ah... not so fast there gamers, lets take a closer look.
Currently, most NFT's are created using a process known as the "proof of work" method. This is when nerds put all their spare gaming PC parts together to form a supercomputer that can solve complex math problems at lightning fast speeds in order to "validate" the NFT being added to the blockchain. Although many nerds are competing to validate the block, only one will be chosen. This process uses an ungodly amount of electricity. It takes about as much power as the average American household uses in nine days to mint just one NFT. However, as technology progresses, people are finding new and creative ways to mint NFT's without killing the polar bears.
One of these new minting processes is called the "Proof of stake" method. This is where cryptocurrency miners offer up a certain amount of coins as stake in the minting process. A miner is then chosen at random to validate the block. This method drastically reduces energy consumption because higher computing power no longer guarantees you being awarded a validation. Instead of a competition for validation, it is a group effort.
Alternative minting processes are becoming ever increasingly popular because of their efficiency. However, many miners are still using the proof of work method, but are doing it with renewable energy sources. Wind, hydro, and solar energy have all successfully been utilized to provide sufficient power for the mining process.
So yeah, you can sleep at night knowing that a polar bear isn't stranded on a 6x6 foot piece of ice somewhere cursing you for destroying the earth all for a pic of a monkey smoking a cigarette. Just make sure you do some research about the NFT you're interested in first.
Myth #3: Do NFT's actually have value?
We've all seen those screenshot memes... and in case you haven't, here's one for you to sample.
Lets think about it this way, have you ever purchased a song, or a movie on iTunes? You didn't have the physical copy of that media, but you still paid for it. NFT's are built on the same idea. When you purchase an NFT, you own the unique digital address associated with it, and it cannot be stolen or reproduced the way conventional media can. So go ahead, let them screenshot your NFT. You'll be laughing all the way to the exclusive event you got access to and they didn't.
For example, VeeCon. VeeCon is an NFT convention run by popular influencer Gary Vee. The tickets to the venue were NFT's, and at the end of the convention, Gary announced that the tickets bought for this years VeeCon, can also be used for the next one. Because NFT's are unique and digital, the ticketing utility may also help reduce paper usage associated with conventional tickets. Wow, look at you now, actively saving the environment! Al Gore would be so proud.
In the future, NFT's that were used as tickets may sell for prices astronomically higher than they were initially bought for. Think about it, somebody is selling vintage Led Zeppelin tickets right now for the historical value. The same thing could happen with NFT's, except an NFT also holds artistic value.
NFT's are disrupting almost every market. Never before has so much power been placed back into the hands of the people. If you believe that creators should be paid for their work without being interfered with by greedy corporations and agencies, then go ahead and slide down that rabbit hole.
Frat bro rant over.