We have been hearing about Non-Fungible tokens or NFTs a lot recently, therefore we thought let's shed some light on it!

In this thread, we will cover -

Fungibility
Bitcoin v/s NFTs
NFT sales
Applications
Advantages
Concerns

#LearningswithJST

Let's go 👇
First, let’s know what fungibility is.

It refers to the ability of an asset to be exchanged or substituted with similar assets of the same value such as currency.

you can exchange 5 notes of Rs 100 for 1 note of Rs 500. The value is Rs 500 (despite being in another form)
NFTs are the opposite of that

Each one is unique and can't be substituted for something similar

Think of the Mona Lisa painting - an original piece of art. It can’t be swapped for a poster of the same painting from a gift shop because the poster doesn’t hold the same value
An NFT winds up having a digital signature through the blockchain where the information is recorded.

NFT has a digital sign in the same way that a great work of art has the sign of the original creator which is the complete reason of high value
You can look at the original painting and say, yes this is the real one. This is authentic.
NFTs are cryptocurrencies but unlike fungible cryptocurrencies like Bitcoin, they are completely unique.

They exist as a string of letters and numbers on a blockchain ledger. This info can contain who owns the digital asset , who sold it , when it was sold.
This info is encrypted ensuring authenticity and scarcity.

They fix a problem with this for digital creators on the internet by making their creations more scarce and valuable
How?

As they are nonfungible, there are only one of these tokens that can exist. It cant be traded for anything similar as nothing similar exists, so you wind up getting that scarcity premium, that helps drive prices.
Bitcoin - Underlying technology of blockchain

But NFT tech is different, you can do a lot more complex things with NFT. You can set terms inside it, you can have an NFT that mints NFT, really untested applications. The surface has only been scratched in terms of its potential.
Example of NFT -

NBA Top Shot - allows users to procure a collection of digital basketball highlights, such as a video clip of a posterizing dunk

All highlights are NFTs and have become big business
By mid-March, NBA Top Shot had clocked in over 338 mn $ in sales since it went live in Oct2020

NFTs are making entry into the mainstream art world too

Auction house Christie’s opened bidding for its first pure digital art NFT. Bids rocketed into millions of dollars in no time!
History -

One of the early applications of creating the scarcity was the digital collectible game Cryptokitties which emerged in 2017.

Users were able to buy, trade, and breed digital cat collectibles.
Each new cat was an NFT which verified its originality and ownership.

Since then NFTS has been applied to video games, digital art and sports memorabilia.
Concerns -

Not all NFTs verify the person selling a digital art piece is the original creator

Anyone can come to these marketplaces and say they are the person who created this token originally, and it can be hard to verify that.
Ownership alone doesn’t necessarily mean that digital assets have to be so valuable. (For physical painting, the sign makes it valuable and the original)

Digital art owner owns the digital image but they can’t stop others from copying the image and sharing/changing it online
The NFT space can very well be a bubble being pumped by a few players

Are the assets really worth the value assigned to them?

Especially given how all it takes to view them is an internet connection

End of thread.

Hit that RT button to spread this knowledge!
Src -

Gary Vee Podcasts
Gary Vee Videos
Wall Street Journal Articles
Fungible dot com
Wall Street Journal videos

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