Seeing a lot of misguided takes about NFTs so @YoungCryptoPM and I wrote an explainer for new entrants.
Undoubtedly there is hype and many assets are overpriced, but there is also value.
So, what are NFTs, why are they valuable, and what are the common misconceptions.
1/
Undoubtedly there is hype and many assets are overpriced, but there is also value.
So, what are NFTs, why are they valuable, and what are the common misconceptions.
1/
This is a Twitter thread of an ELI5, there is nuanced to everything – read the full piece for a more robust explanation.
messari.io/article/eli5-f…
messari.io/article/eli5-f…
NFTs – non-fungible tokens – are simply a file format for blockchains.(h/t @jessewldn)
People use file formats – like jpeg gifs, etc – to transfer information or value on the internet every day.
NFTs are a file format that transfers data and value on blockchains(e.g.Ethereum).
People use file formats – like jpeg gifs, etc – to transfer information or value on the internet every day.
NFTs are a file format that transfers data and value on blockchains(e.g.Ethereum).
NFTs have various use cases including:
• Art
• Trading Cards
• Gaming
• Certificates of Authenticity
• Domain Names
• Content
• Music
• Financial products
• Event Tickets
• Carbon Credits
Much more – remember an NFT is literally just data.
Sometimes it's valuable.
• Art
• Trading Cards
• Gaming
• Certificates of Authenticity
• Domain Names
• Content
• Music
• Financial products
• Event Tickets
• Carbon Credits
Much more – remember an NFT is literally just data.
Sometimes it's valuable.
NFTs come with various benefits which Ty has already outlined:
https://twitter.com/YoungCryptoPM/status/1369295929048784914
There are various misconstrued points about NFTs and so let’s discuss a few of the common critiques and rightful ones that many new entrants encounter.
Let's discuss some below. 👇🏻
Let's discuss some below. 👇🏻
1. But...NFTs are only scams.
NFTs are just data on software (blockchains). Saying NFTs are bad is like claiming digital images are bad. It’s not about the technology, it’s about how humans use it. Sometimes that’s for non-ideal purposes, other times it's incredibly beneficial.
NFTs are just data on software (blockchains). Saying NFTs are bad is like claiming digital images are bad. It’s not about the technology, it’s about how humans use it. Sometimes that’s for non-ideal purposes, other times it's incredibly beneficial.
2. How are NFTs valued?
Plenty of collectibles are worthless or lose value over time. As with most goods and services the price or value is what someone is willing to pay. Over time the market decides the true value of NFTs just as it does with Bitcoin.
Plenty of collectibles are worthless or lose value over time. As with most goods and services the price or value is what someone is willing to pay. Over time the market decides the true value of NFTs just as it does with Bitcoin.
3. Are NFTs in a hype cycle?
Absolutely. Many will lose value, specifically collectibles and art. The NFT correction will be rough.
More importantly, many NFTs (including art and collectibles) will create immense value for users and society.
Absolutely. Many will lose value, specifically collectibles and art. The NFT correction will be rough.
More importantly, many NFTs (including art and collectibles) will create immense value for users and society.
4. On-chain data vs off-chain data
On-chain – data is stored in the token itself. You're good so long as you don't lose it.
Off-chain – data is store via AWS, IPFS, Arweave, etc. Some room for error and data loss but can be more aptly solved over time.
On-chain – data is stored in the token itself. You're good so long as you don't lose it.
Off-chain – data is store via AWS, IPFS, Arweave, etc. Some room for error and data loss but can be more aptly solved over time.
5. Why does digital ownership matter?
Digital assets can now be provably digitally owned. They don't have to be numbers in a centralized database but instead actual assets owned by users. There are nuances to the concept of ownership, but overall ownership is incredibly powerful
Digital assets can now be provably digitally owned. They don't have to be numbers in a centralized database but instead actual assets owned by users. There are nuances to the concept of ownership, but overall ownership is incredibly powerful
There are tons of uncharted, semi-philosophical questions!
What makes an NFT valuable - the blockchain or the creator?
What are the limits of an NFTs value?
How does consumer behavior change over the next decade?
As always, the market will decide.
What makes an NFT valuable - the blockchain or the creator?
What are the limits of an NFTs value?
How does consumer behavior change over the next decade?
As always, the market will decide.
https://twitter.com/Melt_Dem/status/1369367011621543938
Just as Bitcoin spearheaded the importance of financial sovereignty, NFTs facilitate ownership of all digital assets.
messari.io/article/eli5-f…
messari.io/article/eli5-f…
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