I like to think of myself as a knowledgeable guy. There are a few things I know inside and out, like the number of times the Philadelphia Eagles have won the Super Bowl (one!). And there are some things I don’t understand in detail, but I certainly get the basic concept, such as Keynesian economics, or table manners. There aren’t that many subjects on which I am utterly clueless. However, “non-fungible tokens” have been one of them.
My First Encounter About NFTs
I remember the first time I heard about NFTs (as the hipsters call them). I was at a business meeting in Miami and was trying to convince a very wealthy individual to back a venture I was part of, despite it being a venture I was part of. We were sitting around a large table in the living room of a high-rise Penthouse sharing a bottle of “Barbaresco Crichet Paje -1999” which may as well have been a bottle of “Manischewitz Purim Merlot -Thursday Morning” for all I know about wine.
During the small-talk portion of the meeting, when I could still have hope of success, our host started talking about “dabbling” in NFTs. “Just a couple of hundred thousand dollars”, he said. I resisted saying that by his definition, I was “dabbling” in my primary residence.
He asked if I was into NFTs at all. I didn’t want to look uninformed, so I replied that I hadn’t yet entered the “dabbling” phase with NFTs. I was still in the “exploring” and “learning how to spell” phases. There was an awkward silence, which, in an attempt to fill, I took a big gulp from my glass of Crichet Paje, which was actually his glass of Crichet Paje, and I realized we had reached the part of the meeting where security is usually called.
A few days later, I was talking with a friend of mine who mentioned NFTs and said his neighbor had made “a shit-ton” of money off of a hologram of some butterflies. Trying to fit in again, I said “My Father-in-Law made three shit tons!”. More awkward silence. Then, that night I saw on Facebook that some rock star was releasing his first-ever set of NFTs. Thank God I didn’t miss that! Over the next several weeks I began to hear more and more about NFTs.- “I needed to invest in NFTs, I needed to issue my own NFTs, I’d better beware of NFTs. NFTs are what stole the election from Trump”. It seemed I couldn’t escape it.
It finally occurred to me that before I continued holding myself out as an expert on NFTs in numerous conversations, I should learn what they are. Are they tangible? Are they alive? Were they ever married to a Kardashian? And so dear reader, I went on a journey of exploration. I’m going to explain, as a layman, what I’ve learned about NFTs in the most basic possible terms, as if I was speaking to a small child who’d been dropped on his head, twice, and was playing a video game as I was talking to him. Obviously, I don’t vouch for any of this information is accurate, or my identity, or even, (depending on who’s asking, my existence).
My Understanding About NFTs
NFTs are a form of cryptocurrency, like bitcoin. If you are asking “what is cryptocurrency?”, you are not alone. If you are asking “when is the Climax Blues Band doing a reunion tour?”, you are alone. Very alone.
Cryptocurrency is a digital measure of value only available in electronic form. It’s like if a dollar bill was only on your computer and not in your wallet. Unlike dollar bills, crypto-bucks (I invented this term. For the love of God don’t ever use it in public!), are not issued by the government. Instead, private investors issue them. They are stored and moved on special computer applications that are difficult to cheat or alter. Essentially, these programs, also known as “blockchains” are ledgers of transactions that you can theoretically rely on.
These blockchains are stored across a vast network of these computer systems, and every time a new transaction occurs, that transaction is recorded on a “block” and added to ledgers across the entire chain. This may be why cryptocurrencies use more energy in a day than heating every home on the planet does in a billion years (or something like that). The good news is that this makes blockchain networks extremely difficult to hack because if any block is altered, the hacker would have to alter it across the entire network, for reasons probably more apparent to people better at finding the toolbar on their laptop than I am.
Additional Read: NFT: A Step Towards Advancement in Crypto World
Why Would Anyone Use Cryptocurrencies?
Well, they offer certain advantages. Since they are not subject to government regulation, they are often faster to transfer than traditional money (also known as “fiat currency”). They also have lower transaction fees in that there are no banks involved, thus, no bank fees, minimum balances, overdraft protection, etc. But on the other hand, no free toaster!
Cryptocurrency is particularly useful in international transactions when figuring out the relative values of different currencies can gum up the works. Also, since crypto-bucks can be transferred semi-anonymously (identifying only your blockchain address) they are better for purchasing slightly more esoteric stuff like hiring some dude to kill your ex-husband.
OK. Back to NFTs. Like actual dollar bills, each value or amount of your bitcoin (as an example of a popular cryptocurrency) is identical to the same value or amount of your uncle’s bitcoin, unless your uncle is a follower of QAnon, in which case your bitcoin is Communist. Thus, like fiat money, crypto-bucks are fungible. One substitute for another. NFTs, on the other hand, are unique. They are not interchangeable. They are exclusive. You can’t compare one to another. I learned they are also extensible, meaning you can take two NFTs and create a third, unique NFT. This is very exciting, mostly because “extensible” is the first new word I’ve learned since studying for the SATs.
NFTs are not physical. The seller does not hand anything to the buyer. They are electronic. The seller hands the buyer the digital information that allows the buyer to become the owner. That digital information is a “token” which, as I understand it, is sort of like the deed to a house. It signifies ownership. And like fungible currencies, NFTs are easier to deal with. Transforming a tangible asset into a digital asset makes it much easier, faster, and cheaper to transfer.
I’ve also learned that almost anything can be an NFT. Currently, various forms of art seem to be a popular form of NFT, but an NFT could be a piece of music, an ID to get into a building, a ticket to an event, The founder of Twitter sold one of his tweets as an NFT for almost $3 Million. But this highlights one of the strange things about NFTs. They may be non-fungible, and you may own the original. But often, NFTs are pieces of art that anyone can see. It’s sort of like owning the original “Starry Night” by Van Gogh, or “Dogs Playing Poker”, also by Van Gogh (albeit a different Van Gogh). It’s cool that you own it. But anyone can see a print of it. And in the case of NFTs, a digital version is absolutely identical to any copy.
Where Do I Go From Here?
There are other mysteries of NFTs that I’m yet to solve. For example, how does one have a sense of what NFT might be attractive to others? Do people want to see lots of digital pictures of me? MAYBE! And since each NFT is unique, how do we discern any market trends or make predictions about what a certain NFT might be worth in the future?
Obviously, this is the surface-level exploration of the topic. But as my mother used to tell me, “Son, if you can figure it out, anyone, and I mean anyone, no, really, ANYONE can!”. I hope this was at least a little helpful to people also trying to get a handle on NFTs. Now, I am off to upload the pictures of my leg waxing. It’s time for me to be rich!
