Thread by @oliverjumpertz

What are NFTs? Everyone seems to be talking about them but what are they, and how can you use them?

Interested? Then this thread is for you!

🧵🔽

1️⃣ What Is An NFT?

Non-fungible tokens (NFTs) are digital assets. Just imagine a trading card where each card has unique information engraved into it. No two NFTs are the same and they are thus not interchangeable.

Other than crypto where one BTC is one and two BTC are two BTC, two NFTs are one NFT and one NFT. Only because you have two NFTs of the same type simply doesn't enable you to sum them up together.

Try to imagine a festival ticket (those things that were worth buying before the pandemic hit, where physical festivals still existed). If you buy one, it usually has your name on it such that it only grants access for you.

Most NFTs are currently based on the Ethereum blockchain. They are basically tokens implemented as a smart contract.

Everyone can implement an NFT and create their own platform for that.

2️⃣ Some Characteristics

ℹ️ NFTs are non-interoperable:

NFTs of platform A usually cannot be used on platform B.

ℹ️ NFTs are indivisible:

You can't break an NFT up. One BTC consists of multiple satoshis (fraction of one BTC), e.g. One NFT is just one NFT.

ℹ️ NFTs are indestructible/immutable:

Because NFTs are tokens on a blockchain, they are immutable. You can't change the owner of an NFT because you had to overtake the whole blockchain for that.

ℹ️ NFTs are traceable:

Thanks to the blockchain, you can always trace an NFT back to its origins (original creator, e.g.).

3️⃣ What Can You Do With Them?

Well, a lot. NFTs are only smart contracts, so you can basically implement anything for them that comes to your mind. You can sell trading cards as NFTs or interesting sports moments (NBA top shots, e.g.).

You could also sell music pieces as NFTs or simply art. What exactly the buyer gets is up to the individual NFT implementation.

The creator of an NFT could, for example, sell a piece of art while also ensuring that whenever an NFT is resold, they get a portion ...

... of the price as royalties.

4️⃣ Why Are NFTs Important?

NFTs bring an opportunity to the table. The ability to sell digital pieces while ensuring that the ownership of one particular piece can be verified. Everyone can check whether roxXx0r4711 really owns that digital Pokemon card they say they own.

Creators get the chance to monetize their work in a digital way while also ensuring some safety for the buyers of their work.

Buying a "unique" digital image through a webshop usually gives you no verifiable guarantees, whether you are really the only owner of that piece.

If you buy an NFT, you can get such a guarantee. If someone sold more NFTs for the same work, your NFT would still be unique, but you could also verify that your piece is not as unique as someone tries to tell you.

5️⃣ Why Are NFTs Worth Something?

Because there is a demand for it. You could also ask the question of why people buy virtual skins for games with real money. The answer is simple: Because they want to show off, or simply want to own that piece.

6️⃣ This Is All A Scam!

Perhaps it is, perhaps it isn't. I think people said the same when the internet came up and companies started experimenting with this new platform.

There are currently artists who finally make money by selling NFTs of their art.

This also includes artists previously struggling a lot to make money with their art. For them, NFTs are not a scam but finally a source of income.

You can decide yourself whether you like the idea of NFTs or not.

7️⃣ Before You Leave

I hope you liked this thread about NFTs and learned something about this interesting concept and technology!

Do some research yourself and look at some of the current applications of NFTs before you form your own opinion.

The internet is currently full of information about NFTs, so you won't have a hard time finding more on this topic.