What is an NFT? | NFTs Explained for Beginners

What is an NFT?
NFT stands for Non-Fungible-Token, which essentially translates into a non-replaceable crypto asset. Each NFT has a unique identification code and lives on the blockchain so that everyone can see that you are the owner of the NFT.

NFTs Explained for Beginners — #1: The Metaverse
As we build out metaverse experiences, NFTs will be the assets we use to express ourselves in these online worlds. Anything from digital land to digital cars, to digital homes, will all be NFTs. Even the items our online personalities wear will surely be NFTs.

NFTs Explained for Beginners — #2: Collectibles
Both digital and physical collectibles can benefit from NFTs. Digital collectibles like GIFs, videos, and photos from popular subcultures like sports can be instantly verified by NFTs and given a clear path to resale via the blockchain. Plus you can always enjoy, view, and share your NFT collectibles in your wallet. Physical collectibles like watches and paintings could also benefit from having an adjacent NFT associated with them to instantly validate both ownership and legitimacy. Additionally, you could safely store your physical collectibles away to prevent wear and tear while enjoying your digital equivalents.

NFTs Explained for Beginners — #3: Physical Transactions & Digital Marketplaces
Much in the same way physical collectibles can be validated with NFTs, any physical sale that needs a validating contract can be validated with an NFT. What if big purchases like homes and cars had NFT contracts? Doing so would eliminate all the red tape and all the middlemen that are typically associated with a large purchase. I truly believe that real estate, cars, and any purchase that usually needs a bank or financing, as well as proof of ownership will instead be validated and recorded on the blockchain via NFTs.

NFTs Explained for Beginners — #4: NFT Groups & Real-world Utility
Groups like Bored Ape Yacht Club could manage entire memberships via interesting NFT projects. Holders of NFTs could of course gain access to exclusive membership benefits, but this isn’t only applicable to fringe groups. Major influencers, musicians, artists, creators, celebrities, and brands can create NFTs to better connect with their fans. Musicians can release albums through NFTs. Theme parks and music festivals can transition from tickets to NFTs. Prospective filmmakers can crowdsource their movies via NFT projects. The possibilities are endless.

Are NFTs a Scam? NFTs Explained
Now, there will be people who say this NFT thing is a fad and it’ll go away. But these are the same objections that came up during the internet’s infancy. Including that the internet would catastrophically collapse.I think there’s no way that’s gonna happen with NFTs given how many use-cases we have for this technology to improve our everyday lives. I think this technology is here to stay.

But on that same note, I did say NFTs were like the internet in that it’s not going to go away, but we all know what happened in the early days of the internet. I would say that 99% of NFT projects out there are scams and just trying to take advantage of the economics, the same exact way that internet companies were overvalued in the dot-com boom.

I think that the same 99% of NFTs are gonna go to zero. Mainly because a lot of these projects are just art or just images, and do not seek to add value in the marketplace. But the ones that do add value are here to stay and will revolutionize technology and economies for years to come.

Lionel Rivera is not a financial advisor. He is a personal finance enthusiast who seeks to spread the financial and investing knowledge he wished he learned when he was younger. Inspired by the likes of Graham Stephan, Andre Jikh, Humphrey Yang, Erika Kullberg, and Mark Tilbury, Lionel just wants to leave the world a little more financially savvy than how he found it.

0:00 Intro
0:16 What is an NFT?
2:27 NFT Use #1: Metaverse
3:38 NFT Use #2: Collectibles
6:09 NFT Use #3: Physical Transactions
6:44 NFT Use #4: NFT Groups & Real World Utility
8:43 NFT Economics
10:47 Are NFTs a Scam?