We all remember that particular time in our lives when we started collecting things. People are attracted by seemingly-futile objects, we value them, and in turn, we start regarding them as assets. Two decades ago, when the Pokémon trading cards game hit the streets, people were curious but not fascinated in the first few weeks. They would rip rare cards apart or lose them in the mud as we kept playing football outside. Fast-forward a year or so, and people would treasure those cards as if they were an actual piece of rare metal – gold, silver, you name it. The Pokémon trading cards craze slowly faded, but the game did not – today, as with any other collectible, their rarity means high value and a committed community of enthusiasts.
Now comes the question – why am I telling you this anecdote? It’s simple: today, people view NFTs with the same FUD (Fear, Uncertainty, and Doubt) they once viewed other collectibles. At the same time, people are becoming increasingly wired in on the idea that NFTs represent yet another mind-bending and world-changing development of the rise of blockchain technology and cryptocurrencies.
This tension is common to all things new, and most importantly, to all things that bring about significant, lasting change. Why not keep an open mind and suspend quick judgment as we at Mintersbay show you the way around?
What does NFT mean?
NFT stands for non-fungible token. The “fungibility” refers to the possibility of exchanging the asset for another of equal value. I bet you are thinking of the right example – a banknote or a coin is fungible because it can be swapped for another banknote or coin of the same value.
NFTs, however, are non-fungible, meaning they cannot be swapped or traded like banknotes or coins. Usually, this means that the value of the asset in question is entirely subjective or subjected to change – for example, art is a primary example of a non-fungible asset.
NFTs – that is, non-fungible tokens, are nonetheless bought and sold via cryptocurrencies like BTC (Bitcoin) and ETH (Ethereum), but they are not themselves cryptocurrencies. What an NFT does, put simply, is to register the exclusive ownership of a digital asset. But that’s where the fun part comes in.
Digital assets are, like everything digital, highly creative and innovative. Compared to the traditional arts that create tangible artifacts such as sculptures, paintings, or literature books, digital assets can be almost anything. For example, they can be a five-word tweet, a GIF of a flying cat with a rainbow comet tail, or an extensive, exclusive set of penguins wearing the most disparate pieces of clothing and accessories.
Buying an NFT means you have exclusive ownership of that particular asset – be it an artwork, a song, a domain name – even though it does not mean you get to own the exclusive rights for viewing and sharing. People will still be able to experience the digital asset you own – but that doesn’t take anything away from the fact that the ownership is yours.
Why NFTs matter
The first question people who know nothing about NFTs will ask is usually: why should I care? But this question is usually collateral to a more central question that people who know nothing NFTs will never actually ask: why do people buy NFTs in the first place?
I usually just answer the first question by simply “putting into perspective” the opportunities of the NFTs market. That means, I basically tell them that while NFTs have been circulated since 2014 (meaning, they are not going anywhere and they are starting to slowly become more accepted), and having been traded since 2017, NFTs sales volume has grown eightfold in the third quarter of 2021, reaching figures close to $10.7 billion.
But answering the second question is more rewarding for everybody. After all, we are human beings, and human beings want to know the why before they get a taste of the how— and answering this why is more complicated than it looks. But let’s again use an anecdote. I have never been much of a Sneakers guy – that is, I don’t particularly like to wear training shoes on a regular basis. Instead, I have always preferred boots and suede shoes. I remember once I received an exclusive offer to get my hands on a pair of high-end, luxury sneakers. It was a time-sensitive offer for a one-of-a-kind item that would have never been produced again. A collab between a highly sought-after Italian luxury sneakers brand a Japanese denim mill in the middle of Honshu. Already from this premise, I was pretty much hooked. I bought the only pair of these sneakers in existence, and I never looked back, having worn them ever since.
This little story shows that, as humans, we seek something that is truly ours. We might let others view our property and even envy it, but what matters is the feeling that the ownership is exclusive to us. The higher the scarcity — the rarity — of our asset, the higher the pleasure we feel because of our ownership.
And NFTs also have varying degrees of collectability, but not being tied to the established art world, they also allow for greater creativity and support among artists.
In short, what makes NFTs so damn popular and so damn important is their nature of digital proof of ownership to a digital asset that can take any form and allow a higher degree of rarity and creativity than real-world counterparts.
Are NFTs good business?
That’s a good question! A good question that deserves an even better answer. Follow Mintersbay as tomorrow we highlight why and how NFTs are a good business for your digital wallet.
Thank you for reading and see you soon,
The Mintersbay Team