The NFT Bandwagon: Everything You Need to Know

What are NFTs?

A Non-Fungible Token (NFT) is a collectible digital asset that holds value as a form of cryptocurrency and as a form of culture or art. An NFT is a value-holding investment similar to rare designer pieces. 

It’s important to dissociate coins and NFTs—fungible and non-fungible. 

Physical or cryptocurrencies are fungible: they can be exchanged or traded from one another and are equal in value. One Bitcoin is always equal to another Bitcoin. 

However, NFTS are non-fungible: they are unique and hold different values. Each NFT holds a digital signature that makes it impossible to be exchanged for or equal to another NFT. 

As an example, the MVP of a team is “worth” more than other members and therefore isn’t equal to other teammates even though they’re all players. Additionally, the MVP of one team isn’t necessarily equal to the MVP of another team.

The question now: what exactly is so special about them? And why are they more special than a crypto coin?

An NFT’s value lies in its individuality—anything unique that can be stored digitally can be an NFT and hold value. Just as you might purchase a Rodin to display on a shelf, so too can you purchase a unique digital art moment—a file that holds valuable information which gives it worth.

How do NFTs work?

Think of a safe. On its own, it’s valuable; it can be sold for a good price based on its technology and security. But when you place gold and jewels inside the safe, the price rises: the safe is more valuable because of the material inside of it.

An NFT is a safe with something inside. NFTs are tokens—part of the Ethereum blockchain—with extra information stored inside of them, elevating these tokens above regular cryptocurrency. This extra information is the most important part: it holds the piece of original content people want to buy, whether the mp3 of a song, the mp4 of a video, or the jpeg of an artwork. Because the token has value and the content has value, these NFTs can be bought and sold, with value set by the demands of the market.

Just like in real life, high demand and low supply drive prices—if there’s only one tomato vendor at the market and everyone has a craving for tomatoes, the vendor can set his price higher and still be confident they’ll sell.

However, tomatoes are physical—and NFTs are not. This is where the concept gets tricky: there isn’t only one digital version of a piece of content on the market. Just like photographs, content can be replicated, and these duplicates can be bought and sold.

Copies of an NFT are sold and still valid as part of the blockchain—but they’ll never hold the  same value as the original, in the same way an original photograph is more valuable than a print. And for those thinking of downloading an NFT without purchasing the data —downloading the material without the information it stores strips the content of its value.

What are NFTs used for?

NFTs can be an equalizer for artists and content creators; they no longer have to rely on galleries or auction houses to sell their work.

Instead, artists can sell directly to the consumer with an NFT—allowing them to keep more profits and monetize their work more effectively than if they sold it as a show. Creators can also program royalties into NFTs; each time the work is sold, passing from one owner to the next, creators can receive a percentage of the sale.

But it’s not just artists discovering the possibilities of NFTs. Brands like Taco Bell have auctioned off NFT art to raise funds for charity; the art sold in just minutes, fetching bids up to $3,728.83. Even celebrities are getting in on NFTs: Snoop Dogg has released unique artwork, memories, and moments as secure NFT opportunities.

How to buy them

In order to buy digital art, you have to have a digital wallet and cryptocurrency. Anyone who has their own digital wallet and cryptocurrency to spend can begin to build their own NFT collection.

Cryptocurrencies—Ether, Bitcoin, Dogecoin, and others—can be bought on a variety of platforms using a credit card. (Just like any currency exchange, sites have different rates and conversion fees, so be sure to do your research to get the best rates!)

Where to buy them

The top three marketplaces—defined by numbers of NFT collections and creators—are Foundation, OpenSea, and Rarible.

Of these platforms, Foundation is the most exclusive: in addition to an entry fee, artists and buyers can only join with an invitation from another member. OpenSea and Rarible, in contrast, are open marketplaces with excellent search tools designed to give artists and content creators more opportunities to sell. You can browse for rare digital items and collectibles by sales number, artist, number of exchange, and more. However, as neither platform requires owner verification, they don’t offer buyer’s protection.

The future 

Brands are facing a brave new world of digital consumers—the time to experiment with NFTs has begun.

The pandemic brought on a new wave of e-commerce, reducing event attendance and in-store shopping and increasing new ways to connect. NFTs offer a new and unique pathway to online experience. Creators are turning the traditional marketing ways upside down, and NFTs have allowed new online communities to make a profit. Brands are seeing opportunity.

We’ve seen customers spend more on a company’s branded NFT than on physical products. A Coca-Cola fan spent $575,000 on a virtual jacket and other digital assets—around the same price as 41 fully-loaded Coca-Cola trucks.

As understanding and acceptance of NFTs grow, more and more brands are looking to explore—Mattel has assembled Hot Wheels NFTs, Dolce & Gabbana launched “Collezione Genesi,” an NFT collection paired with their real-world runway show, and brands like Marvel, DC, and Givenchy are exploring NFT launches on Veve.

This is only the beginning—new and brighter ideas, from raising event awareness, promoting product launches, and increasing fan engagement are on the horizon.