The Metaverse: What The Heck Are NFTs?

Every morning, I hop on Twitter to do some mindless scrolling to see what is important to the Twitterverse today. I mostly get nothing out of this time but sometimes I get some good tidbits for my fantasy football team. Recently though, I have been seeing a lot of tweets about people buying a bored ape NFT or meme selling as an NFT for $500,000. These headlines just keep flooding my news feed day after day and all I can think to myself is, “What is an NFT?”

Seriously though, what the heck are NFTs? Even spelling out what NFT stands for, non-fungible token, doesn’t help. In fact, I might be more confused now.

To continue on with our metaverse series, let’s take a look at what NFTs really are. For me personally, this article really helped me understand what NFTs are. I’m not biased or anything though. 🙂

What Does NFT Stand for?

As mentioned earlier, NFT stands for non-fungible token. Really, this doesn’t help define what an NFT is.

Let’s start at the basics then. Non-fungible stands for, “a unique digital identifier that cannot be copied, substituted or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership” (Merriam Webster).

As an example, something fungible would be a US dollar bill. That dollar bill can be replaced with another dollar bill that has the exact same meaning and value. On the flip-side, something non-fungible would be a plot of land in a neighborhood. Sure all of the land plots are exactly one acre in size but each one is slightly different. One plot might have 20 trees on it when another only has 5.

Lastly, token refers to the blockchain aspect of where NFTs are part of. Most NFTs are built on top of the Entherium blockchain. This token is the unique identifier that records its ownership. Crazy enough, it records and holds all of the ownership history. That’s right, you can hop into an NFT listing to see who has owned it in the past and how much they bought it for. Pretty cool, right?

Copy and Paste Issue

An awkward thing is you can copy and paste NFTs. Back in February 2021 a 10-second clip by Beeple sold for $6.6 million.

Spoiler! You can right-click on that clip and save it to your computer’s desktop.

Wait, what?!?! How is that possible? Well, you can copy a digital file as many times as you want, including the art that’s included with an NFT. Think of this like buying a print of the Mona Lisa. At the end of the day, you might have a copy but it is still not the original.

Think of it this way. Before the blockchain, you could take a JPEG, make a copy of it onto a flash drive, and then copy that JPEG over to your friend’s computer. Those copied JPEGs are the exact same as the original on your computer. There is no difference between them at all. Your friend could take that JPEG and take credit for it. There would be no way to tell that your JPEG is the original. If your JPEG was an NFT tied to the blockchain, you would be able to see that yours is the original plus all of the history for the NFT.

Pretty cool, huh?

Why Are NFTs So Special?

People are treating NFTs as digital collectibles or even virtual plots of land to build virtual buildings on to sell virtual goods from. They are unique pieces of work that cannot be replicated.

NFTs can be:

Digital Art
Digital Trading Cards
Music
Virtual Land
Tweets (So weird)
Memes and GIFs

There are so many more outside of this list such as buying digital clothes for your avatar in Decentraland. I am sure there are so many more ways NFTs will be special that we have not even thought about yet. Personally, I hope they find some better reasons to buy an NFT because I am not going to be buying any digital hats anytime soon.

Where Can I Buy An NFT?

Digital-artwork NFTs are sold on specialty web markets such as Opensea, Rarible, and Zora.

NBA Top Shot is a virtual trading card NFT site while Cryptokitties is a Pokemon-like digital collecting app.

You can also jump into a virtual world like Sandbox or Decentraland to find all of the above plus real estate or collectibles for your avatar. Even in some virtual worlds, you can buy a spaceship! So cool!

Another thing is you don’t have to buy an NFT directly to invest in them. Some of these virtual worlds have their own cryptocurrencies that you can invest in outside of the world. For example, Decentraland has the coin MANA and Axie Infinity has the coin AXS.

Can I Even Do Anything With My NFT?

Good question. What can you do with an original piece of digital art? Well, some people are printing them and hanging them in their house or office but that would not be the original. To display the original like an art gallery you can use a digital screen. The wild thing is we are starting to see physical galleries display NFTs instead of traditional art. But you are also seeing virtual NFT art galleries pop up in virtual worlds like Decentraland.

Remember NFTs are more than just art pieces. People are buying virtual land, an NFT, to build NFT shops so they can make more money. Recently, a company bought land in Decentraland for over $2 million so they can create a virtual clothing store to sell for people’s avatars.

To me, this just blows my mind!

For many people, the appeal is to buy and sell items. I look at this similar to trading cards or rare coins. People are buying NFTs at low prices and taking advantage of the current climate to sell them at higher prices.

What’s Next?

This is the million-dollar question. Well, trillion-dollar question. Where will these NFTs end up in several years? Will they go to the wayside with your beanie babies? Or will NFTs become a new normal for buying art, music, collectibles, or something completely new that we can’t even imagine yet?

Personally, I think we are just in the beginning with what NFTs and the metaverse can become. It will be fun to see where this technology goes in the next five years. I see there is a lot of opportunity for growth and innovation.

The real challenge is to find where that growth and innovation are going to come from.

Wallet Squirrel

Wallet Squirrel is a personal finance blog by best friends Andrew & Adam on how money works, building side-hustles, and the benefits of cleverly investing the profits. Featured on MSN Money, AOL Finance, and more!