What’s in an NFT?
10 examples to show you it’s more than you think
“Why would you pay so much money for an image online?”
“I can just right-click and it’s mine?”
“It’s a JPEG — which I can just save to my phone for free 🤷♂️”
Over the last few months, two sides have formed around NFTs and the hype that’s been generated by big sales of Beeple, Crypto Punks, or the Bored Ape Yacht Club:
The ones that get lost in the rabbit hole of the crypto world and collecting NFTs — and those who believe it’s all a crazy scam.
I guess, the latter group is often the one who looks from “outside” at what is happening. They might hear about NFTs on the news but don’t really get into it, to look around in this new shiny world.
If we are honest, NFT is also not the sexiest word. Nothing that makes you jump up in excitement to learn more. It just sounds too techy and abstract. And it doesn’t become any better by calling it by its full name: non-fungible token.
Many of us may have learned already, that an NFT is a digital asset that can be collected, kept, or sold later. Typical examples are art pieces, pictures, sounds, movies, or written words. Minting is the process through which a digital file is turned into an NFT.
The process is based on a smart contract on a blockchain. The contract defines ownership and rules (for example creator royalties) that apply when the NFT is sold.
Simply put: the digital file, let’s say a JPEG, is turned into an NFT based on certain rules (defined by the smart contract). The whole procedure is saved on the blockchain. Blockchain technology allows everyone to see who owns which NFT, who its creator was, and — if applicable — who owned it before.
So much to the technical side.
I think what’s much more interesting about NFTs is how they spark creativity in creators. An NFT can only be a picture. But often, it’s much more. Valuable NFTs often go beyond granting their buyer ownership over a JPEG.
Here are 10 examples of what could be in an NFT
01. Ownership of a physical piece of art
Some NFTs are not much different from your familiar physical art piece.
You can find creators offering to send the original piece to your home. Just, because it was a physical piece in the first place. Another option is to let them store it for you if you want to resell it later.
In case it’s not a physical art piece you might receive a print of the digital art. At least, they will send you the original digital file in high resolution. That way you can show it off on a screen or in a digital art gallery. Or you might decide to print it yourself and put it on other things you like.
02. Right to reuse
That brings us to point 2.
When you own the piece and have the high-quality digital file you are also able to reuse it. An easy example is how owners of Apes or Punks are using them as their profile pictures on Social Media.
You can also decide to print your NFT on t-shirts, mugs, bags, and whatever comes to your mind.
This way you can bring your favorite art piece wherever you go.
03. A collectible
People collect all kinds of things: stamps, coins, baseball cards, Pokémons, dolls, shoes, cars, art pieces… there’s no end to this.
Some things collected gain value over time. You might be surprised to learn that a Superman lunch box made $13,225, a Zippo lighter sold for $18,000, a golden Lego brick changed owners for $19,793, or a Christmas card by Sir Henry Cole sent to his grandmother was sold for about $28,158.
As crazy as some of these seem: where there are collectibles, there is potential to increase value over time. And if you are in need 4 years later, you might sell an NFT for $2million — as Crypto Punk 1422 — which was initially bought for $74.
04. An investment
The obvious question is: Is an NFT is a good investment?
So, without giving any real financial advice here, you can find anecdotal success for NFT sales (as with the story of the Crypto Punks or other hyped NFTs).
As with any investment, you have to gain knowledge, consider how much risk you want to take, and then decide what you want to do.
The market is hot at the moment. But that also means that there is a lot of stuff, that will most probably not gain any value. Where there is money to be made, there are scammers. Be aware and only spend what you can afford.
Next to a personal investment strategy, NFTs are a way to invest in artists directly. If you like someone’s work, why not support them by buying it? Part of the revolution of NFTs is empowering artists to directly sell their work, no middlemen are needed. No need to share their cake with agents, publishing houses, or record labels — and being left with crumbs.
05. Supporting charitable organizations
NFTs can be a way to support NGOs. In fact, the first NFT I bought supports an organization in Africa that treats endangered wild animals, who have fallen victim to poaching or traumatic incidents. I loved the artwork of Tobias Schmid who made a series of NFTs with geometric animals for them. And even more so, I liked the idea of supporting a good cause.
06. Access to exclusive knowledge
These days, there is huge interest in people who have made it. And at best, these people are able to put their success stories in easy step-by-step checklists. Making complicated things simple is sexy. Advice on how to copy-paste someone’s success is even sexier.
At least, I think that explains the success of someone like Nadal or others who are able to break down complex concepts into bite-size pieces.
So far, I see little activity of thinkers and intellectuals trying to sell NFTs of their knowledge.
Someone, who is playing around with it in the “Decentralized Social” (DeSo) sphere is Hiten Shah, CEO of NIRA, who has around 267.000 Twitter followers. He managed to sell a video of himself talking about “How to solve problems fast” for about $5,700 on the DeSo blockchain. He added “unlockable content” to his NFT which was access to personal advice from him.
NFTs that give you access to exclusive knowledge have a chance of becoming much more common in the future. They might be the “light version” of taking an online course or reading an ebook of someone who you want to learn from.
07. Direct contact to creators you admire
NFTs can include direct access to a creator you like. This works on OnlyFans so why should one assume it won’t work for NFTs?
Buy your favorite creator’s NFT and unlockable content might include a private chat, a dinner, or some kind of time spent together with them.
NFTs give the creator and their fans opportunities to connect directly.
All based on what the creator is willing to offer to their fans.
08. Entry to exclusive clubs and events
The Bored Ape Yacht Club might be the most popular example. When you buy their NFT you’re not only owning a funky-looking Ape but the NFT “doubles as your Yacht Club membership card, and grants access to members-only benefits.” (Description on Opensea.io).
Next to that, holders of Apes received free NFTs that they can resell or keep for themselves (such as a dog NFT, or potions to “mutate” their apes).
Ape merch, such as hoodies, can only be bought if you own the NFT.
A bunch of celebrities and influencers joined the hype. That in turn allows the project owners to collaborate with well-known people and brands. They teamed up with Rolling Stone magazine for their first digital NFT cover. A few real-life events including meet-ups in different countries, an actual yacht party, and a concert that featured appearances from Chris Rock, Aziz Ansari, and The Strokes could be considered the cherry on the top.
The BAYC team has built a little empire around their Apes’ clubs and sets high standards for anyone who thinks of creating something similar.
On a smaller level, NFTs can be sold as tickets to events including a backstage pass for concerts, entry to VIP lounges, or the after-party.
09. Entertainment and gamification
On DeSo, there is an NFT project called Flutterz. There are 200 different butterfly-style NFTs that you can choose from. The project is interesting because it is promoted as autonomous (scripted) NFT. While I am not fully aware of what that means in the context of Flutterz exactly, there is certainly an entertaining factor to the project.
Once in a while, you see a picture with a message from Flutterz:
There are different things happening: one of the butterflies finds a mate, a flower that it enjoys, a bird that it could escape… and all come with a little benefit in assets or gifts to the NFT’s owner.
I see the entertainment value in this and think it will keep holders of the NFT excited about it for longer.
There’s a lot of potential for added entertainment value to an NFT. May it be through fun game elements, little surprises, or some type of lottery entry through the NFT.
10. Game access and game token
The last example is about NFTs as access to games or as a token that could be used in a game. A lot is going on in gaming and the idea to use or trade NFTs in some type of metaverse is very popular.
“Project Nebula, a massive multiplayer online sci-fi game (MMO), brings the 4X strategy genre into blockchain gaming. Players are using various NFT assets (spaceships, planets, and more) to advance their interstellar empires and dominate the New Galaxy.” writes cointelegraph.com
Gamers are particularly good at the adoption of NFTs in their space. They are simply used to the concept of collecting resources and rare items from years of playing online games.
The NFT game market is extremely active. From playing with NFTs to creating them, there is a lot to look out for.
And as it sometimes happens while you’re thinking and writing about a topic, I just saw a post of a DeSo NFT game project yesterday:
As said earlier, the creativity that goes into NFTs and the attempts to add further value to them is going through the roof. I believe the space of NFTs will remain innovative with a lot of room for (fun) experiments.
Everyone has the opportunity to join the ride. Will you come along?
If you are interested in learning how to mint an NFT, read my article: Stop wondering, mint NFTs!
If you want to jump right into the world of Decentralized Social Media, feel free to go to diamondapp.com — or register with my referral link https://diamondapp.com?r=RnQCGDZf to receive DESO currency worth $25.
