NFTs For Dummies
You might have seen the headlines; the ones that typically follow the format: “[insert NFT name] sells for [insert number] million dollars.” And when you click a little further, you see the piece of art that was sold for a ridiculous price. Now, you’re just confused. If this incredibly simple picture of “bored ape” was sold, why was it sold for millions? Why would someone “buy” something anyone on the internet can see?
To the question “why?” there are two main answers:
- To support artists that buyers may feel a connection with
- To invest in unique pieces of property
What is an NFT anyways? What is the Bored Ape Yacht Club?
NFT stands for “non-fungible token” and is, according to Simplilearn, “a digital asset representing Internet collectibles like art, music, and games with an authentic certificate created by blockchain technology that underlies Cryptocurrency.”
The “non-fungible” in NFT means that while you might be able to screenshot an NFT and send it to your entire contact list, the NFT can not actually be replicated or replaced.
An NFT is a type of cryptocurrency, an increasingly popular form of currency that is entirely digital. The most sensationalized and well-known type of cryptocurrency is Bitcoin. A single Bitcoin is currently selling for approximately $30,000.
While the price of a single NFT depends on various factors and there are NFTs that are not sold at ludicrous prices, NFTs have infiltrated the media for many being sold at prices upwards of a million dollars to powerful and wealthy clientele.
Perhaps the most famous type of NFT is the “Bored Ape”.
The 4 founders of the Bored Ape Yacht Club were originally anonymous and known as their pseudonyms, two of the founders’ identities were revealed in February 2022. One founder was 32-year-old Greg Solano, who previously went by the pseudonym “Gordon Goner”. The other founder whose identity was unveiled is 35-year-old Wylie Aronow, or “Gargamel”.
The Bored Ape Yacht Club was a collection of 10,000 NFTs created in April of 2021. The collection featured, you guessed it, a multitude of bored apes customized in different accessories and outfits. The concept? Individually own a unique, bored ape that speaks to you.
However, while the Bored Ape NFTs have infiltrated mainstream media and society, there are many other NFT collections and individual pieces. In short, artists (including you!) can make an NFT and anyone can buy it.
Who? How? Why?
In the case of the Bored Ape NFTs, there was quite the incentive to buy one.
Firstly, with the NFT business booming, a Bored Ape NFT quickly became a status symbol, with customers who owned an Ape changing their profile pictures with their unique NFT. Like an emoji or a Bitmoji, a purchased NFT can become a version of you, a character trait or personality personified in a customizable NFT. For example, Gwyneth Paltrow, an American actress, bought a Bored Ape with blond hair and blue eyes; her most defining features translated into an NFT unique to her.
Secondly, the Bored Ape Yacht Club became a powerful community with powerful individuals like Justin Bieber, Paris Hilton, and Jimmy Fallon that anyone could join; as long as they purchased a Bored Ape. By joining the club, you’d have access to things like private Discord servers to converse with fellow Bored Ape owners.
Adam Draper, managing director of Boost VC (a company that was involved in the early investing of cryptocurrency), describes the appeal of buying a Bored Ape; saying, he’s committed to “making it [his] identity for a while.”
So, where does one go buy to an NFT? And how does the process work?
According to Fool, there are 3 main steps:
- Buy Ethereum (a type of cryptocurrency that can be bought on cryptocurrency platforms like Coinbase or Gemini).
- Transfer your cryptocurrency to a cryptocurrency wallet. This will ensure the safe storage of your Ethereum and other crypto endeavors. If finding a “wallet” platform seems overwhelming, simply take advantage of Coinbase’s built-in wallet feature.
- Connect your wallet to an NFT marketplace in order to buy an NFT. There are many, many NFT marketplaces so it is understandable that one might be overwhelmed in finding a starting place. The most well-known NFT marketplace is OpenSea. It is also the largest NFT marketplace and a pioneer in the industry; as it was the first NFT marketplace ever. It is important to note that OpenSea, along with many other NFT marketplaces, has a fee. For OpenSea, it is a 2% fee.
Should I make and sell NFTs? Should I buy one?
While anyone can make an NFT and sell it, it is currently not an advisable endeavor because of the instability of the cryptocurrency market. Furthermore, there are “minting” fees to beware of (costs associated with making an NFT). Usually, this cost is around $70 depending on the platform and other factors. While this fee is rather affordable, it is important to note that you may be simply throwing this money away. Many NFTs are bought to support a certain artist and unfortunately, if you don’t have lots of pull in the artistic industry or many connections to hype up your drop to, your NFTs may not even receive the exposure it needs to have a chance at being bought.
As for buying an NFT, you should probably only buy an NFT if you are financially stable and have lots of “play money”. With the cryptocurrency and NFT industries being a “baby” in terms of age, there are still lots of question marks surrounding the industries’ future. While NFTs are gaining lots more exposure and attention, it is probably best to wait until there are more definitive answers on the investment quality of an NFT. With technological and digital industries on the rise, it is unclear whether many companies and platforms will still be around in a couple of years. The water is murky and no one really knows for sure.
However, one thing is for sure: those with an NFT have either taken a leap of faith to receive an “affordable” (a subjective word, but we’ll use it, in this case, as an NFT that doesn’t cost more than a small, used car) piece of art they connected to or have millions of dollars at their disposal (I’m looking at you, Hollywood!). So, where does the average person fit in?
We’re not sure the average person does fit in. Give us a couple of years though, and we’ll probably find out.