Why are NFTs Important

If you follow the crypto world at all you would of heard of NFTs or non-fungible tokens. To put it really simple an NFT is a unit of data stored on a blockchain that certifies a digital asset is actually unique.

Now why is that a big deal? For people that create art it means that they can create (also called minting) an NFT for a piece of work that they have made that will show immediately an ongoing a proof of authenticity.

For people involved in collectibles the easiest way to think of it is that its similar to having a set of baseball cards or basketball cards that are in high demand – however in this case the onus would be on you as the seller to prove that the card is indeed real and not a fake (a problem common with Nike Shoes on ebay that the business StockX now solves with their verification service)

With an NFT on creation this unique print already exists and it is retained when the next user buys, trades or sells the same asset. For example if tomorrow someone famous such as Ozzy Osbourne was to mint a brand new song on OpeanSea a new unit of data showing that song would be created and can not be deleted or changed. Ozzy then lists that song for sale for 10ETH. A fan wants to buy that song and is prepared to pay the 10ETH for it and does so using Metamask. That fan is now the owner of that particular NFT. Now – in a years time they decide that they would like someone else to be able to purchase that NFT from them and they list it for sale, the next prospective buyers can see the transaction history all the way back to when the NFT was originally created (example shown below)

There is no need to have the NFT independently verified as it iss already available on the public blockchain ledger.

This gives artists the ability to set value for their own works and depending on the marketplace they list with they can also set it up so that upon each new sale they would still receive a royalty. There are some artists that are also using this as a method of creating rare content or additional content to a release for example it could be an NFT that has both the studio version of a song and the radio release.

Mike Shinoda from Linkin Park had a really good Twitter thread explaining exactly this concept that you can read here and also showing that the particular NFT he sold was able to provide more value back to him in a much shorter period of time than what would be possible if it was listed on digital streaming platforms (e.g. Spotify, Apple Music etc)

It is important to note that NFTs don’t always grant you exclusive rights to distribution of what you have bought which again means that the original artists can still maintain good control over what they have created.

If you are interested in purchasing NFTs then you should take a look at the sites OpeanSea, Rarible and Zora. Remember that if you are setting up a new wallet to transact on any of these sites you must save your secret words or whatever the wallet speifices, these are the only way for you to retrieve your wallet contents in the future, it is not like a normal email and pasword system.

Why should you get into Cryptocurrency?

At the moment with all of the lockdowns and economic uncertainty a lot of people are shifting their interests to cryptocurrencies again and quite often I’m asked why would people trust it as opposed to a standard financial system (e.g. banks)

In most developed nations we’ve been incredibly lucky to not have to be worried by financial system collapse but then COVID-19 has certainly changed that now for a large amount of people. However even before COVID the financial systems in other nations being decimated lead people to look for alternatives of where to store value and money.

Traditionally people would look to things like gold and silver, basically anything that wasn’t money or real estate to retain value over time. Cryptocurrencies have now provided an alternative store of value that in most cases is not tied to a centralised service like a bank. For people that had gone through financial crisis they will have experienced trying to receive money from a bank and simply being told no you can’t have it – a concept incredibly foreign to those that have never had to experience it.

Asides from being a store of value there are Cryptocurrencies that provide functionality beyond just being a store of value or being an alternative to money. For example Ethereum’s ability to standardise the creation of ERC-20 tokens has meant that organisations or teams wishing to create a new application can effectively raise funds via an ICO (initial coin offering) tied to the application they are creating – instead of having to go out to investors or listing a company this is now available as an alternative.

Currently there are countries seeking to regulate the cryptocurrency world as seen with the recent BitCoin crackdown in China. America as well has began efforts to regulate the industry. These regulations are occurring because countries are noticing that cryptocurrencies can be a big threat to the way their financial systems operate. In other countries though such as Australia we have already regulated to a degree meaning that Crypto is not actually destroyed people just plan for how they will use and store the currencies based on the current tax rules

Cryptocurrencies are sometimes given a bad wrap as there are sometimes bad people involved in them – however this is no different to everyday life where a credit card can be stolen and you should always be cautious with making any decisions around finance.

Hopefully in the future more vendors will be accepting of cryptocurrencies and make it a more trusted form of exchange for goods and services. Right now Amazon, Facebook and even Walmart have indicated that they intend on offering the ability to pay in some way via crypto to their users.

Cryptocurrencies largely return autonomy back to those that hold it, they become responsible for the storage and the exchange and are not beholden to someone external being able to control something that is rightfully theirs. This is important because as seen recently it is quite easy for an online payment processor or a bank to simply ban someones ability of being able to transact – something that is not possible via use of most cryptocurrency wallets.

Decentralisation (the distribution of reliance from a central source of authority) is important and this is what Cryptocurrency can offer many people – the ability to not be at risk of the decision of an entity or provider that controls your ability to receive money. For example Paypal and Visa/Mastercard have all threatened or in some cases removed peoples ability to transact in a variety of cases some of which are questionable as to why they should be allowed to do this (to see examples just google Mastercard bans)

Right now given the economic instability of many areas of the world this is why people are moving money into this area. It’s no longer really about turning a quick profit (although that is still possible as well) its about long term protection and resilience.

If you would like to learn more about cryptocurrencies a great resource is where it all really kicked off from – the bitcoin whitepaper