Trying to wrap your head around NFTs and what it means might make your head explode, so let us break it down for you:
It represents ownership. Unlike when you download (or purchase) digital media on the internet, NFTs show actual ownership of the product by having the product’s data stored on a digital ledger (aka the blockchain). This is different from copyright, as NFTs have an actual tracker of the original owner of the product and to who it was sold to.
Since it represents ownership, NFTs can be represented via minting—aka having a limited number of owned copies on the blockchain space.
To put it in simpler terms, think of an NFT as a way to identify one-of-a-kind digital items that cannot be reproduced.
As of this writing, NFTs are not subjected to taxes, though that might change in the future once the rules and guidelines have been set. In addition, since NFTs are stored in the blockchain, one can buy or sell an NFT in any marketplace.
Practically anything can be an NFT. The nice thing about NFTs is that you can think of practically anything to create your very first NFT. It can be a photograph, a digital animation, an artwork, a video clip, or even a music album. Since there are no clear rules yet, the possibilities for NFTs are limitless—at least for now.
Since there are no solid rules for it, NFTs right now can cover NSFW art—as long as the said artwork is done tastefully and does not border on pornography. The same goes for licensed art (ie. Marvel superheroes)—we will have to wait and see how more established companies would view NFT artworks in the future.
In an example Buenaventura gave to us, an NFT sold for $500 will merit you around $320 at most since $100 is deducted from the minting of the NFT and 20% is deducted from the marketplace’s commission fee.
As for why NFTs are generally expensive, it is because a big chunk of them depend on Ethereum—and the said cryptocurrency’s value has been rising steadily for the past few months.
The beauty of NFTs is that it sometimes takes just one person in order to make your work recognized—which is a big, big boon for emerging artists who want to get their stuff known across the globe while still complying with WFH guidelines due to the ongoing pandemic.
That sums up our explainer on the things you need to know about NFTs. Got other questions in mind? Let us know!