So you’ve heard about NFTs – but what are they? And why are people making literally millions selling them? In this video, I answer all your questions about the basics of NFTs, including:
What does NFT stand for? (Ps. What does fungible mean!)
What are NFTs?
Why are NFTs so valuable?
Are NFTs a bubble?
Can’t you just duplicate digital art?
Are they just glorified JPEGs?
How do you buy NFTs?
Can you buy NFTs on OpenSea and Rarible
NFT stands for non-fungible token.
A fungible asset is something that can be readily interchanged – like money.
With money, you can swap a $10 note for two $5 notes and it will have the same value.
But if something is non-fungible, this is not possible because the item has unique characteristics, making it rarer and higher in value.
Just like the Mona Lisa, you could get someone skilled to paint it for not much money – but it wouldn’t be the Mona Lisa.
NFTs are “one-of-a-kind” digital assets that can be bought and sold like any other piece of property, but they have no tangible form of their own.
The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
Many artists and creators are releasing (and selling) their own NFTs – such as Beeple, 3LAU, Jack Dorsey, Grimes, Logan Paul and many more.
It’s a great way for creators to monetise their audience in a new way and allows for fans to get closer to the artist and support their work.
Hope you like the video and be sure to subscribe and like the video if you enjoyed it.
Ray
Transcription:
Good day, there. Ray Corcoran here. In this week’s video, we’re going to be talking about NFTs. What the hell are they, why are they selling for so much money, in some cases, tens of millions of dollars, and should we invest in them, how do you invest in them, where do you buy them, how does it all work, all to be explained in this week’s video. So NFT stands for non-fungible token. Now, fungible basically means that it’s something, a fungible asset is something that can be interchanged or exchanged and it would still have the same value. So in the finance world, this could mean something like money. So if you had a $10 note and I had a $10 note, we could exchange them, they would both have the same value.
It is not like mine is a special one of a kind, they’re both just $10 notes that have been assigned the same value. Whereas with non-fungible tokens or NFTs, these are things that are non-fungible. So it means that they are one of a kind, unique, they have unique characteristics, which then in turn, typically increase their value. Where NFTs get interesting though, is you’ve got the digital world. Now in the past, digital art was not something that sold very, very well. You can duplicate it quite easily, you could make thousands of copies of it, no drama. It’s just, Oh, a JPEG and that sort of stuff.
However, with the rise of new technology like blockchain, it’s seen a resurgence in digital art. Because now using blockchain technology, which basically means that I can have a digital certificate of authenticity that is verified by basically thousands of computers all around the world a verification is public and everybody can see it. And it basically means that it’s a reliable way to verify that you are the owner of that particular one of one digital asset. And NFTs can have multiple different forms. So you can have art, you can have baseball cards, you can even have an… It can be an access token for you to get the DJ 3LAU in the states.
He has created an NFT where if you bought that NFT, you would get some digital art as well as you would get backstage access to any of his live shows forever. So if he was playing at a big music festival, you could go backstage. And he is only released that to a very small number of people who can buy that particular token and they can just show there on their phone that they have a verified access and a verified certificate, if you will. And they can get once in a lifetime sort of access to stuff. So there’s a whole bunch of different forms that NFTs can take. So why are NFTs in the headlines so much at the moment?
Well, there’s been a whole bunch of things that have happened recently, including the artist Beeple, who has just sold what is considered to be the most expensive NFT ever in history. He sold one artwork for 69 million. That was not a typo. It was literally $69 million for essentially a glorified JPEG. Now, this particular artist, he’s known in the graphic design circles for many, many years. He’s actually known for doing over the last 13 years, doing one artwork every single day for 13 years. And one of his artworks sold for $69 million through a Christie’s auction.
And this is huge news and it’s making headlines everywhere. And this sort of art is exploding quite a lot, especially recently. NFTs have also made headlines because people like Jack Dorsey, the founder of Twitter, he was actually selling, or he has sold his first tweet ever. So it’s important to note that when you buy an NFT it doesn’t necessarily mean that you own say the rights to that music or the rights to that art. You don’t own the intellectual property. However, you do own almost an autographed version of it.
You own a one of one or a one of 30 limited edition or rare version of that, which can be verified through the blockchain. And there’s been a host of other people who are deciding to sell digital art now, whether it’s Grimes or 3LAU, or I think Logan Paul was doing some stuff recently. So lots of different people are selling digital art. 3LAU made $11 million in 48 hours. So it’s pretty serious money that people are making. A lot of the buyers they’re starting to discover people that are crypto new money, if you will. So a lot of these buyers want to remain anonymous, they want to pay anonymously.
And it’s becoming very, very popular with these people and it’s a whole new world for art. Traditional art gets its value from a number of different things. So art can be valuable for a number of reasons, including provenance. So where has it come from, who has owned that artwork in the past. There are examples of artworks where they weren’t worth that much, but then the Rockefeller family owned it and then it got worth millions or whatever later on just because they had owned it. It could also be the emotional connection someone has or the feeling that they have with the artwork that can create the such high prices on artwork. The artwork could be historically significant.
So it could be the first of a style, a new style at the time. And it ended up being quite an important artwork that caused a big trend after that, or it could be a technical difficulty, or it could be rarity. There’s a whole bunch of reasons why artworks can go for crazy money. It can even just be because in the auction that so many people are bidding, that the price can go crazy and the pricing get way more than probably it’s really worth. The obvious one is social status. So it’s saying that,” I own this.” Or a show of wealth and to show for basically bragging rights.
So, “I’ve got this artwork, nobody else can get it.” It’s a one of one, or it’s a very rare artwork they can show off to their friends and all that sort of stuff. And a lot of these principles from traditional art transfer over to NFTs. And with the blockchain technology, it’s allowed a higher level of legitimacy to digital art because it can now be verified and cross verified as that is definitely one of one or one of 10. And that way it can give a higher price for it because it’s easier to verify now. In terms of, is it a bubble? I think that a lot of these headlines and with social media, a lot of information travels so fast these days.
So news about stuff being sold for large amounts and word getting out, it can mean that these price, these asset prices can inflate quite dramatically, quite fast. You see it with Bitcoin, you see it with certain stocks that get popular online. I think NFTs are no exception. So you got to be very careful buying these things. In terms of where you buy them, you can look on places like OpenSea and other marketplaces. There’s auction sites, there’s sites where you can just buy it directly without the auction process. And basically, it’s a way for people to also support the artist.
So you can support the creator very much like [inaudible 00:07:02], whether it’s tipping them or paying for a membership, you can also buy NFTs. You can buy exclusive, limited run artworks or whatever to support your artists, to help them keep creating as well. In terms of what’s the future of NFTs, who knows? There’s so many different options. I think that right now, I think we’re in a bit of a market hysteria sort of phase. But I do find it very, very interesting that you can get sort of limited edition, exclusive access potentially to creators and that sort of stuff. I think that that will be very, very popular for people.
In terms of people having a digital art gallery on their phone, where they can show off their collection, for me it doesn’t sound very exciting to be honest, but it may get more exciting over time potentially. It’s definitely interesting space. I wouldn’t bet the farm on any of these artworks right now, it’s way too unpredictable. But it might be a fun, alternative investment for you to look at in future. So what do you think? Do you think this is all BS? Do you think this is all hysteria and madness? Let me know in the comments, let me know what your thoughts are.
Are you going to buy some and do you think people should be buying these things or should they hold off until the market sort of gets a bit more stable, perhaps? It’s a very, very, it’s exciting new space. It’s very interesting. Cut. So what do you think, do you think this is all BS and mass hysteria, or do you feel like this has real value and people should really consider this for their investment portfolio? For me personally, it’s maybe not something I’m getting involved in right now, but maybe I’ll be eating my words in a couple of years when all these things start skyrocketing.
But it’s definitely an interesting space. I like the fact that you can support the creator and it’s definitely going to obviously evolve over time, but it’s anyone’s guess how this is all going to go. So hope you like that video. As always, if you like the video, like the video. And if you want to subscribe and see more videos about making money, investing, saving money, all that sort of stuff, consider subscribing, and I’ll be very appreciative. Cheers.