NFT: understand everything in 5 questions

A mysterious acronym: NFT. And an equally vague name: Non Fungible Token. What exactly is behind this new concept? We talk a lot about NFTs, often to mock them or make fun of those who buy them at high prices. Understanding exactly what it is and what lies behind these three letters is not that simple. Because you must have already assimilated other complex concepts – blockchain, cryptocurrencies, metaverset and Web3 – before you approach NFTs.

Quick summary: blockchain is a kind of totally decentralized database shared by all its users. It is a technology for storing and transmitting information in a traceable but also anonymous way (at least in pseudonymity). Cryptocurrencies are virtual currencies based on blockchain and an encrypted computer protocol. metaverset is a virtual world where everyone is in the form of an avatar. that Web3 is the new internet, which encompasses all these concepts and will gradually replace the centralized Net dominated by Gafam (Google, Amazon, Facebook, etc.) as we know it today.

1. What is the definition of an NFT?

NFTs are non-fungible tokens, ie. unique virtual tokens. Data devices stored in blockchain. It is a kind of certificate of authenticity for a unique and non-exchangeable digital asset. Specifically, money is “fungible” because you can exchange one euro for another without changing anything. It can also be shared differently (1 euro, 5 euro, 10 euro) and the offer is unlimited or almost.

A non-fungal token is an unparalleled asset. This is the case with a work of art, but also the proof of possession of a house (its shape, its location, etc. is unique) or a collector’s card. Admittedly, we can reproduce a painting, but the original will always have more value. So, stored in blockchain, NFT also acts as a certificate of authenticity thanks to the system’s cryptography. It cannot be changed or in theory stolen. At least as long as you do not provide personal information, such as the password for your virtual wallet, Wallet, in which your NFT is stored.

2. What is the interest in NFT?

Specifically, we are moving from a world where the creator of unique content – a digital work for example – publishes his work somewhere on the Internet. This can be reused (copied) without her knowledge, without her having control, and the work itself will be extremely difficult to make money on. With NFTs, the person will be able to issue an original work and benefit from it for life. No matter what happens, she will remain the author forever.

For example, she will sell it for the first time (with its certificate of authenticity, which will follow the work all its life). If it is ever later resold, the author or the author of the work may receive a small commission on the new transaction. No matter what happens over time, this person will always be considered to be the origin of the work and will continue to benefit from it through resale. And she can control the reproduction and copyright as she pleases. That’s why owning a pair of Nike in NFT does not entitle you to use its image freely.

3. Are NFTs only about art?

Absolutely not. They have been reduced to it by the buzz effect, but it can be about anything unique. It can be anything digital: a drawing, music, the original script for a movie, a tweet, a fashion item to embellish your avatar in the meta-verse … or even “fygital” items, so it’s a digital copy of something that exists in real life. For example, buying a collector’s watch or a designer bag which is also reproduced virtually.

It can be to use it as an accessory in a metaverse but also simpler as a kind of identity card for good. In this NFT, the date and place of creation, the origin of the components (traceability), the carbon footprint, the name of the worker who manufactured the product, will be stored, etc. To this can be added data about the product life (repair date, type of intervention, etc.) . The same goes for owning an apartment. Instead of possessing notarized papers, one can imagine an NFT that stores all evidence of ownership and transaction data.

4. How do I create NFTs (and who can do it)?

Anyone can create an NFT. The easiest way, of course, is to create a unique work of art. Once the digital file is created, select the blockchain you prefer. Most of the time, Ethereum wins out. You will then need to create a Crypto Wallet in order to get your money back from the sale of your NFT. There are thousands of them (MetaMask, ZenGo, eToro, Coinbase, Binance …).

Third step: Register in a marketplace. It is a portal where NFTs are sold. The best known platform is OpenSea, but there are many others (Rarible, Mintable, Nifty Gateway, etc.). These digital art galleries sell your works in exchange for cryptocurrencies. Once your account is set up, fill in the information on your NFT and electronically sign documents and authorizations for sale. After this step, your NFT is available on your Wallet. It only disappears when the sale is completed and the agreed amount is transferred.

5. What can NFTs be used for?

Besides art, NFTs are interesting in many other areas. We have mentioned the certificate of ownership of real estate or even a luxury watch. This also applies to tickets to a concert or a sports match, video games (not the game property itself, but objects in this game) or even collectibles.

But beware, an NFT can be misleading. According to an in-depth analyst at the OpenSea marketplace, approximately 80% of NFTs registered on this platform are plagiarized works of art, fake collections or spam. So beware if you ever dream of becoming an NFT collector or looking at this market (90% of NFT buyers do so in the hopes of getting rich). Take a closer look at who sells this NFT and whether they really own the rights.

Roller coaster values

Artist Mike Winkelmann, aka Beeple, certainly made an impression in 2021 during a spectacular auction at Christie’s, where one of his digital works of art sold for $ 69 million. But the value of an NFT is extremely fluctuating. As can be seen from the first tweet from Twitter founder Jack Dorsey.

Converted to NFT, the latter was sold for $ 2.9 million. When its owner put it up for sale, he asked for $ 48 million. Alas, the first offer was $ 280, and a week after the sale, the amount had painfully reached the equivalent of $ 6,000. In short, we must not lose sight of the fact that all this remains a risky bet.

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