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.