To get right to the point, to the question of why people spend thousands of dollars on this, I unfortunately have no answer. If you buy an NFT, you become the “rightful owner” of the “digital object. You then “own” an NFT, but have no copyright. Do I buy an NFT and you use it on your website? Then there is nothing I can do about it. At most the artist who created the NFT can protest about this, but I as s ‘owner’ have no copyright.
So why it is paid thousands of dollars anyway, I’ll get to that in a moment. First, back to basics.
What are NFTs?
NFTs are non-fungible tokens. Digital objects – often images – that are all unique. This is ensured by characterizing each NFT with a digital signature in the form of a piece of code, which is stored on a blockchain.
If you buy an NFT, then it is registered on a blockchain (often on the Etherium blockchain) that you are the owner of the NFT as of that moment. You are the only one who can also sell your NFT again. In doing so, you are not selling the image itself, as there are endless copies of most digital images. You buy or sell the unique certificate of ownership, of which there is only one.
Are you still following it? Nice. If this all gets a bit too complex, just remember that each NFT is unique, thanks to a digital signature that you, the NFT buyer, take ownership of. This does not mean that you alone may use the image, but that you alone are the “owner” of the image.
Why buy NFTs? Lets hear it from some buyers.
Twitter exploded when more than 250,000 dollar was paid for non-fungable tokens from a rock. Namely, what did it turn out to be? This illustration is available for free download. But when 100 unique NFTs of this rock were traded on the Etherium blockchain, the price soared to astronomical heights. Some buyers shared their rationale.
“As we get into an age of digital collectibles, being one of the earliest forms of the art and the first do something gives them provenance that is valuable.”
“The pet rocks present the perfect shock value, it’s so stupid that it’s perfect. Fate loves irony.”
It seems that many buyers are gambling on the future. If you’re one of the first to buy a viral NFT, it might become a nostalgic piece of Internet history in the future, increasing its value.
In addition, NFTs are primarily a way to show wealth. Many NFT owners are celebrities and crypto millionaires.
So you can buy a non-fungable token just because you can, or as an investment for the future. The latter, however, is very tricky. There is no guarantee that NFTs that go viral now will still have value in a few months or five years from now. In this respect, like gambling, it is expensive, addictive and risky.
NFTs in the metaverse
In the previous blog, we talked about owning clothes, cars and land in metaverses. These items are often sold as NFTs. Unlike pictures of monkeys and rocks, the price of stuff in metaverse often comes about in a more logical way. A concrete example is buying a piece of land in the metaverse The Sandbox. Famous Snoopdogg owns a digital piece of land here, causing the prices of land around it to rise. For example, someone paid $450,000 to become Snoopdogg’s digital neighbor. This still sounds absurd, of course, but is not even that far from reality. Compare it to buying a house in Paris or in the French countryside. 😉
In metaverses, fortunately, you can still experiment with NFTs without spending a fortune. A shirt or a new pair of shoes in a metaverse can sometimes cost you as little as 30 cents while for a Bored Ape NFT you can easily spend 100,000 euros.
A big advantage of the NFT projects is that it is very easy to create a community around this digital art. A good example is Fancy Bears Metaverse, which is building a large community around their NFT series. They do this with exclusive (digital) parties where you can meet celebrities, enter a raffle and gain access to an exclusive metaverse in Minecraft. In this way, they give their NFTs value. You can belong to something.
Non-fungible tokens in our own metaverse
We also want to use NFTs for our own metaverse. These are used as a reward system to show training progress. You see this principle a lot in the gaming world. In MMORPG games (massively multiplayer online role-playing games), you often see that players who are far along in the game have different outfits, showing off their progress, so to speak.
In short, NFTs are hot and you can come up with quite useful applications for them. But right now, NFTs are primarily a trend that artists and illustrators are making a lot of money from, and that digital “bettors” are spending a lot of money on. I would say, keep an eye on the progress, buy an NFT if you want to know how it works, but don’t expect any return on your investment.