Introduction to NFT
What is an NFT?
Today I’m going to talk to you about NFTs, so the first question we’re going to answer is “What is an NFT?“. For me it’s also quite new because I’m only recently interested in it. But I will try, through this article, to share with you my discoveries and experiences in this field. But in short, an NFT, at the moment, can be considered as digital art (even if other types are already starting to exist). In this article, we will focus mainly on NFT related to digital art.
A Fungible token?
NFT stands for “Non Fungible Token”, which is a non-fungible token. Something fungible is something that can be replaced by a similar object.
The best example is money. If you have a 100 euro banknote, it can easily be replaced by a completely different banknote and it would not change the initial situation at all, so it is a fungible good.
Conversely, to illustrate the case of a non-fungible asset, we could take the Mona Lisa painting. This one is unique and cannot be replaced. So yes, it can be imitated and even copied but the original work of Leonardo da Vinci and therefore its value is unique.
But in practice, what is an NFT?
You will have understood that these NFT are unique and non-replaceable digital assets. So in fact, it means that you own the rights, you are the owner of this good. If you buy an NFT, the fact that you are the owner of this work will be directly registered in the blockchain and it will not be stolen, etc.
Why is an NFT interesting?
Let’s take a concrete example of NFT
As an example, let’s take the CryptoPunk #9998 below (one of the most famous collections in the field).
So I see you coming. Yes, this image is ugly and at first glance it’s nothing special. But in fact, this is one of the first NFT collections to be launched (10.000 different images). Now if I were to buy this CryptoPunk, I would become the owner of this image and the rights associated with it.
“But I only have to make a screenshot”
I can imagine your reaction because I had exactly the same one when I learned about the existence of these famous NFT. “Yes, but the image, I right-click on it and I know how to save it on my computer without worries, so what’s the point?”
I thought like that for a long time and therefore had not been interested in these NFTs until I came across an interview with Gary Vee (famous American entrepreneur) who explains his way of seeing NFTs and why we should be interested in them.
In this interview, the person talking to Gary Vee repeats the argument seen before that any NFT could be saved on his computer and used. For example, anyone could save this image of CryptoPunk and use it as a profile picture very easily.
But that’s the genius of Gary Vee who will answer him by taking some good examples that I will resume here.
You can take a picture of yourself in front of a beautiful house or a beautiful car, or you can even take a picture of the Mona Lisa. But can you sell that house or that car or your picture of the Mona Lisa? No, because you don’t own it. And that’s when it hit me and I realized the value of these NFTs.
You can take as many pictures or screenshots of these NFTs as you want, but you will never get any benefit from them. Just like you can take a picture of a beautiful Lamborghini but you can’t use it.
The real owner of this CryptoPunk can use it and sell it whenever he wants. In the end, everyone can use the image but only he can sell it. But that’s precisely the idea of NFTs, they are deeds of ownership on digital goods.
Differences that matter
Each NFT in a collection is different from the others. Each one has its own attributes, some of which are rarer than others, so that for the same collection, the prices of these NFTs will differ. Obviously, NFTs with rare attributes will have more value and sell better than those with more common attributes.
“Who would pay to own these images?”
The NFT world has become an extension of the “physical” art world we all know. And you’ve probably heard the fortunes people are willing to pay for artworks from this or that artist, right? Well, there’s no reason why it can’t be exactly the same in the NFT world. Moreover, some NFTs come with additional benefits (such as cyberkongz that generate tokens that can be sold for money, etc.).
If you’re still not convinced by what I’m saying and you don’t think anyone would pay for these images… You should know that the Cryptopunk I introduced you to was recently sold for $532 million. This is a good proof that it is an extension of the current “physical” art field and that there is a real potential, isn’t it? Moreover, unlike the world of “physical” arts, NFTs cannot be copied because everything is secured via the blockchain.
What are the risks associated with NFTs?
Obviously, NFTs are not without risks, and we will look together at the risks of NFTs. This list is not exhaustive, but it includes the risks I have identified so far. Don’t hesitate to share in comments if you think there are other risks.
Loss of capital
The first and most obvious risk associated with NFTs is the loss of value or capital. Let me explain, it is possible to buy an NFT at a certain price today, say 100 euros. But that same NFT may be worth only EUR 50 tomorrow. But this risk is inherent to most investments. In fact, it is the opposite that we hope, that it will be worth more than 100 euros tomorrow. But the risk of a downward movement is also possible.
And then, if it is not possible to find a buyer at an acceptable price for you, your NFT is not worth the price you want. Just like a piece of art.
Loss of access keys
So it’s a minor risk, but it’s still possible that you lose the access keys to the digital wallet on which your NFTs are stored. And in this case, it is impossible to recover them. Your NFTs will be lost forever because there is no other way to recover them than this key.
As an example, we can talk about the person who lost the access keys to his Bitcoin wallet and therefore lost 7,002 Bitcoin. This represents today 358,159,302 euros (19/11/2021).
It’s a sad reality that affects far too many aspects of the investment field, but unfortunately there are many scams in the cryptocurrency world in general. And NFTs are no exception.
It is quite possible for a person to start an NFT project and make sure to attract investors. However, during the process of “minting” which is sort of sending the money to the creator to receive the NFTs at launch, there are risks. An example is the case of “Evolved Apes” where the creator received the money but never transferred any NFTs and walked away with almost $2.7 million.
A final word on risks
As you will have understood, there are certain risks in the world of NFT. As in any field where money can be made, there are risks. But what you have to realize is that these risks can easily be avoided or controlled. As with any investment, it is necessary to balance the risk-reward and see if the risk is worth it! But above all, it is important to be well informed about the project and the people in charge of it. This step is crucial before any investment.
My experience in the NFT world
As I mentioned at the beginning of this article, I don’t have much experience in NFT at the moment (let’s be honest). But it’s a field that interests me a lot even if I was quite opposed to it at the beginning. In the rest of this article, I’m going to share with you my experience in the NFT world and how it’s going so far.
How I started hearing about it (gary vee, etc.)
The project that got me interested in NFT is the Spooky Boys Country Club project. In fact, it’s a collection of 13.000 ghosts, each one with different characteristics (like CryptoPunks).
I’m not going to pretend that I discovered the project through my long and intensive research etc. It came to my attention by chance through Instagram. I follow quite a few pages related to all things crypto-currencies and one of them was talking about this NFT project that was about to be launched. But what particularly interested me was that the creator of the project was in the company of Gary Vee. This caught my attention and I started to look for more information about the creator of the project, etc. I found out that the creator of the project is a member of a group of people who have been working on the project for a long time. I found out that the creator of the project was a millionaire who was quite close to Gary Vee, Logan Paul and other such celebrities. I figured he was well enough surrounded and therefore able to launch a project that would generate enough traction for his “works” to gain value.
How did it go? (minting, etc)
In the following, I’ll explain how it happened more concretely and how I was able to get my first NFTs.
The first step of my journey was to join the project’s discord (I’ll put the link in case you’re interested). Once on it, I realized that there are many different chat rooms, but I found one that explains in detail how everything works, the price, etc. But above all, how to join the whitelist.
So already for me it was a little cold shower. What is this whitelist thing? It is not enough to register before everyone else to have access to the sale? Well, no. This Whitelist you can see as the big bouncer in front of the nightclub who decides who goes in or stays out.
So the first step was to get into this famous whitelist which would assure me to be able to buy at least one NFT before the sale becomes public (and therefore no certainty to get any).
The way to guarantee a place in the whitelist was to get level 10 on the server. So it’s not very glorious but here it was enough to interact in the chat rooms to increase your level. One room was entirely dedicated to this and people simply sent messages as soon as possible to gain experience. Which is what I did too.
Accepted in the VIP club
I was finally able to reach level 10 and I was able to join the VIP box of people included in the Whitelist. And that’s when I was able to breathe because I was relieved that I was able to buy at least 1.
The worst part is that shortly after joining the whitelist, they announced that the Tier 1 whitelist was full and that new people joining the whitelist would be Tier 2 and could only mint 2 NFTs. As a Tier 1 I had the opportunity to mint 3 NFT.
The mint stage
So that was the crucial step, but thanks to my Tier 1 spot, I was entitled to 3 NFTs that I could mint 3 days before the official launch.
“Mint” an NFT means to transform a digital file into a digital asset on the blockchain (and thus to claim ownership of it). It will no longer be possible to modify or delete it.
Basically, this is the step where you send money to receive the NFT in exchange. I must admit that I was quite anxious at this launch because I know that the Ethereum blockchain is often overloaded and that the transaction costs can be important. So I had planned a sufficient amount (0.06 ETH per NFT + transaction costs and so I had planned 0.35 ETH).
So already the launch was at 9 PM EST, which was like 2 or 3 AM at home. That was already annoying, but since I had 24 hours after that time to mint them I didn’t look any further and I did it in the morning when I woke up.
Once I had minted them, I simply had to add them to my Metamask portfolio by indicating the contract reference and that was it!
The revelation stage
So yes, once you’ve received your NFTs, you want to see what image you managed to get (because it’s random). And it’s by going on Opensea (which allows to see the NFT) that I noticed that they were not yet revealed. In fact, when you mint, it is only at a certain date that the NFT are revealed. So I had to wait a few days to discover my NFT.
Once they were revealed, there was a lot of talk on the discord about rarity, ranking, etc. So I discovered that NFTs could be classified according to the rarity of their characteristics. For example, one of my ghosts has a task called “Toxic” that only 2% of the NFTs in this collection have, etc. Based on all this, a rarity ranking is made and inevitably, the rarest ones are worth more than the others.
How is it going now?
Since then, the price of my NFTs has only increased and I regularly receive offers to buy them. Of course, I refuse them because the goal is to follow the project and I believe that these NFTs can go much higher than that. At the moment, the average price of the NFT of this collection is 0.25 ETH/NFT. This is already a x4 from my initial investment of 0.06 ETH/NFT.
Yahoo Finance has just published an article about this project. (The article is in English). In this last one, they explain that this project could become the same kind as the one of CryptoPunks (Yes, we are talking about the collection of the NFT of 532 Millions of dollars which we spoke previously). Be careful, all this is just speculation and may not turn out to be true.
My goal for the future
My goal is very clearly to continue to look for this kind of project to continue to invest. Anyway it would be a waste of money to leave it on a bank account so I prefer to invest.
I recently joined a new NFT project (Crypto Champions) where Yomi Denzel is one of the founders. If you don’t know him, I invite you to follow him on instagram and Youtube because he shares quality content on all things entrepreneurial (mainly on e-commerce and recently, crypto-currencies). For me, the success of an NFT project is based on its community and therefore on the work done by its founders. That’s why I believe in the Crypto Champions project.
I will soon write an article about it in more detail to introduce it to you. But for my part, I adhere to the project and I intend to invest in it!
I already share with you the link to the discord and the social networks of the Crypto Champions project.
- Discord : https://discord.gg/akWwb2WM
- Twitter : https://twitter.com/cryptochampi0ns
- Instagram : https://www.instagram.com/cryptochampi0ns/
Conclusion on the NFT and my first experience
I realize that this article was perhaps a little longer than average but I really wanted to share with you my discoveries and experiences in this wonderful world of NFT. I think this is an area whose future importance is greatly underestimated. That’s why I will continue to invest in it. In fact, the evidence that big names are turning to this field only confirms my belief.
In my opinion, NFT is an evolution of the current physical arts world but it doesn’t stop there. These NFT can and are already affecting the world of video games, and many others.
Of course, I’m not a financial advisor so you shouldn’t see all this as investment advice. I’m just sharing my experiences and opinions.
What about you? Have you ever experienced the world of NFT? What do you think about it? Don’t hesitate to share it in comments.