At first, cryptocurrency was an annoying topic that people wouldn’t shut up about. Now, that has become NFTs. But, what exactly is an NFT and why would anyone want to buy one? Depending on who you ask, NFTs are either the hottest new investment or a stupid trend and waste of money. If you aren’t familiar with the subject, know that the concepts are not as complicated as they might seem. Fire up a joint and get ready for the stoners guide to NFTs.
An NFT is a digital certificate that proves ownership and is verified using blockchain technology. It’s a way to turn either a unique physical or digital asset into a one-of-a-kind collectible. Real-world and digital art, music, audio clips, PDF documents, articles, Twitter tweets, ticket stubs; all of these things can be turned into NFTs because they are non-fungible. Once created, it can be bought or sold for any form of currency and all transactions are recorded on a public ledger.
NFT stands for non-fungible token. Basically, this means that it can’t be divided or exchanged for another item because it is one of a kind. For example, trading a Renaissance painting for a two-year-old’s drawing is not an equal exchange. You also cannot take a piece of art and divide it into bulk copies. Sure, you can replicate it but the copy won’t be authentic. Plus, the quality can vary significantly.
Standard currency is an example of fungible items; you can exchange one $10 bill for ten loonies without affecting the overall value. NFTs are different; they are not interchangeable. If you try to trade your NFT, you might end up with more or less than what you originally paid.
What are the benefits of NFTs?
Secure investments and transactions
When you buy an NFT, the creator, buyer, and every transaction get recorded on the blockchain. This ledger is public and everyone has a copy, making transactions much more trustworthy.
Potential for profit in two ways
When you buy an NFT, you get both a collectible with resale potential and a digital asset. From there, profit margins can grow in two areas: the value of either the collector’s item or the exchange rate of its registered cryptocurrency.
Here’s an example of what this could look like:
Imagine that you went back in time to when a movie cost a nickel, bought the owners rights to ‘Casablanca’, and held onto them till the current day. You could sell those rights for a lot more than what you paid. Plus, depending on currency inflation, those dollars might go a whole lot further.
Helping artists avoid starvation
At the end of the day, NFTs are a huge benefit to the art community because:
They have created new platforms for artists to sell their work, allowing for maximum exposure.
It’s an investment trend with a lot of surrounding hype and it’s motivating people to spend money on art.
Transactions are easy and secured through the blockchain.
It makes it easy to authenticate and add value to an item. This is important because it broadens the scope of what work can be sold.
NFTs facilitate more ways for an artist to get paid without risking any creative rights.
Here’s an example of what this could look like: Johnny makes music and created a youtube channel to showcase his work. He posts links to free downloads to help get his vibe out to the mainstream. Johnny can turn each song into an NFT and sell the copyrights for cash. Once sold, Johnny will no longer own that piece of music but he still retains its creative rights; because of that, Johnny won’t have to change anything on his channel and can still post links to free downloads.
Added perks of ownership
Why are people spending millions of dollars on NFTs? The answer is the perks of ownership. A lot of NFTs come with real-world benefits and sometimes they are so good, they drive the price up to millions of dollars.
The Bored Ape Yacht Club creates digital cartoons that sell for outrageous prices but it’s not because of the artwork. If you own one of their NFTs, you get access to additional free collectibles and invites to exclusive in-person events. Last Halloween, The Bored Ape Yacht Club hosted an ‘Ape’s only’ costume party in New York City. It took place aboard a 1000-person luxury yacht and only NFT owners were allowed access to the party.
As it stands right now, NFTs are considered to be a high-risk investment with high growth potential. As time goes on, it’s possible that they will be adopted into mainstream use, but only time will tell. We hope this stoners guide for NFTs can help our stoner friends in their investment decisions. Do let us know if the topic was insightful in the comments below and don’t forget to follow us @cannalifenet.