Thread by @mahadevanarj

I got my first NFTs (Non-Fungible Tokens):

@TheAlienBoyNFT 👽 & @coolcatsnft 😺

But before I did I wanted an ELI5 of what an NFT is that *actually made sense to me*

If you have no clue what an NFT is that ends today 👇🏽

Here's the ultimate "ELI5: NFTs"

(thread 🧵)

NFTs are a way of applying some of the limited edition value of physical objects to the digital marketplace by creating an artificial scarcity.

And many people think NFTs are here to stay for the *long term*

@garyvee thinks that meeting someone new in 2030 will include looking at their public wallet to see what NFT’s they have.

Which will be in addition to:

- a google search of their name

- looking at their social media accounts

- and Wikipedia / LinkedIn in certain situations

@balajis thinks that today people put emojis in their bio.

In the future, people will put NFTs in their bio.

@awrigh01 thinks that we live increasingly in an "attention economy.”

And NFTs are showing us that culture has been *horribly underpriced*

More and more NFTs are popping up daily, and the top NFTs have *$Ms in daily trading volume*

#CryptoPunks by @larvalabs
@coolcatsnft
@DeadHeadsNFT
#Meebits by @larvalabs
@zed_run
@BoredApeYC
@TheSandboxGame

To understand what an NFT is, you first need to understand the "F" in "NFT" = Fungible

Basically, when we describe something as fungible, what we mean is that you can readily replace it with something equivalent and that's fine for everyone concerned.

Take a dollar bill, for example.

We say it's fungible because if someone rips up a dollar bill in your wallet, they can replace it with another dollar bill and you're no worse or better off: both of those dollar bills spend the same.

Similarly, one share of Apple stock is worth the same as any other share of Apple stock.

It doesn't really matter which one you have, because from the perspective of being able to get value from it, number 304 is the same as number 3,539.

One 1kg lump of pure gold is functionally the same as another 1kg lump of pure gold, if you're using it as a store of value. They're designed to be equivalent and interchangeable.

Keep in mind that this isn't just about the value of the item.

One share of Company A might be priced the same as one share of Company B, but you can't just swap those shares even if they're technically worth the same.

To be fungible, the two items have to be functionally identical.

However, now imagine the lucky dollar bill you have that you saved from your first paycheck -- the one you believe brings you good luck, Scrooge McDuck style.

If someone rips up that bill, then replacing it with another dollar just isn't going to cut it.

It's no longer a fungible item.

So now imagine something like a book.

You can have a fungible copy of a book (any mass-market paperback is pretty much interchangeable with any other, after all; if all you're buying is the text, you're fine).

However, you can also have non-fungible copies of a book -- like, for example, a first edition with a limited cover and a signed bookplate from the author.

Once those are all sold, you're out of luck if you want to get one.

They're just not making any more.

This has been a big selling point for physical media for decades, with collectors -- and people willing to pay a premium -- paying more to get that unique extra, even if they're not technically getting more out of it.

It's not like buying a special edition of a DVD with extra commentaries and special features, for example.

This is the reason why an original Picasso costs so much more than even the most skilled reproduction.

You're not just paying for the look of the painting, but for its history and provenance. You're paying for the fact that it's a Picasso.

But how does that work with the shift towards electronic media, such as digital art and ebooks?

After all, the whole point of digital media is that (in theory at least) it's infinitely reproducible.

My copy of an ebook is quite literally an identical copy of your copy, right down to the same ones and zeroes.

You can't really have a collector's edition of an ebook, right?

How do you have something special, given the technology that allows you to create an exact copy in the time it takes you to press Ctrl+V?

This is where blockchain comes in.

Remember how, with cryptocurrency like BitCoin and Ethereum, the whole point is that you can use what's basically a giant list to keep track of where the money is, and who owns what?

You can use that same technology to ensure that you own a 'limited edition' version of a creative work that, because it's digital, would otherwise be infinitely reproducible.

Just like the person with the limited-run edition of their favorite novel on their bookshelf.

Or an original painting by their favorite artist.

You have a token that says (effectively):

"I bought one of only 200 limited edition versions of this piece, and no matter how many times the piece itself is copied, there will only ever be 200 of these tokens. As a result, it is special."

For some people, it's for bragging rights.

For some people, it's to support their favorite creators by buying a 'premium' version that's unique to them (or certainly more unique).

For other people, it's an investment; as with any good where only a limited number exist, they may expect it to increase in value over time, so it can be sold on.

In short, it's a way of applying some of the limited edition value of physical objects to the digital marketplace by creating an artificial scarcity.

If after reading all this, you're still confused, just think about this:

digital collectibles.

In the past 30 years, everything moved from the physical to the digital world.

That form to fill in? Online.

Interactions among people? Social networks.

Cash? Nah, e-bank.

Food orders? I guess you don't use the telephone anymore.

One of the next big steps in this physical to digital transitions is collectibles.

What do you collect? Football cards? Well, that will be moved online.

Not only online, but on the blockchain, where you can verify ownership and follow transactions one by one.

The same will be true for art pieces and many more, with everything circling around collectibles also going digital.

It will be possible to flip, trade, buy, sell, mint new art or collectibles online, etc.

So this is definitely a space to keep an eye on.

Or two.

Or both eyes, both hands (and your wallet!)

Credit for the info in this thread to u/Portarossa reddit.com/r/explainlikei…

And credit also goes to u/moleskinecollector reddit.com/r/NFT/comments…