Understand NFTs in 5 minutes

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The problem with cryptocurrencies is that it takes time to understand the fundamentals …

… And when you think you understand what “Blockchain” or “DeFi” means you need to assimilate new concepts came out of nowhere.

It is infinite.

Fortunately, after training in the blockchain and al Challenge in my previous articles, I tackle the latest cryptocurrency trend …


Surely you’ve heard this name before, but don’t know what it means?

To introduce the idea, know that it is thanks to this technology that the artist Beeple has sold his digital work ” Every day: the first 5000 days for $ 69 million:

Every day: the first 5000 days it is a “simple” web image.

What is an NFT?

NFT is short for ” Non-fungible token “. In French, ” non-fungible token “.

A token is a digital asset: bitcoin and the ethers they are tokens, for example.

Token fungible.

When you have a bitcoinit’s a bitcoin. It doesn’t matter who pulled it out, when it was pulled out, who kept it… As for a banknote: € 10 is € 10. The serial number printed on the ticket does not matter.

That’s it, “fungible”: each representative of the “bitcoin” or “€ 10 banknote” category perhaps replaced by another without this changing anything.

Not fungible, it’s the other way around.

A non-fungible token is a token uniquewhich has its own identity.

Unlike a bitcoina non-fungible token is not interchangeable.

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Express definition (when you get it, you get the essence)

An NFT is a unique digital asset.

It is defined by its 4 characteristics:

– a unique and identified designer;

– its own identifier;

– one owner at time T;

– content associated with the token (image, video, document …).

An NFT is therefore content And its property title registered on the blockchain.

Who pays for the JPEG images?

What’s difficult to understand with NFTs is that they can take forms very varied.

The best known are:

– digital works of art;

– collectible content;

– video game items.

Thanks to NFT, you may be the recognized owner of a digital artworkbe it an image, a sound, a video …

Therefore, even if the image is copied, reproduced and disseminated on the Internet, the register (Blockchain) states that YOU are the owner.

This brings digital art closer to the seriousness and rules concerning physical art: there may be copies of a known painting, the original will always be worth more – although it is impossible to distinguish between the two.

It’s the same for NFTs: you can own the image in JPEG format, you need the token be considered its owner.

In physical art as in digital art, it is about conferences and of social prestige : the copied work may be exactly the same as the original …

But there will always be people willing to pay 100 times more to own the original of a job.

Think back to the example I gave at the beginning of this letter: work Every day: the first 5000 daysby digital artist Beeple is an NFT … which was sold for $ 69 million.

It may sound crazy to you, but when you buy a main painting, you are paying for something intangible like a web image.

Because it’s not the frame or the painting that costs, he’s brilliant at work – regardless of the form in which it is exercised.

The return of the Pokemon cards

As for my second example, the collectible contentremember the madness of pokemon cardsearly 2000s …

It is the same thing, except that each card is unique, virtual and registered on the blockchain.

Therefore, there are series of NFTs, 100% digital collections that are traded at gold prices.

A creator produces a limited series of NFTs, all different, but belonging to the same collection… then he puts them up for sale, and each of them exchanges, the price of each NFT evolves independently from the others.

The CryptoPunks collection, consisting of 10,000 pixel art characters, is one of the most popular.

These collections can be simple images to keep, for example CryptoPunkwhich are close to digital art as we have seen above …

But the other collections are not just works to be accumulated or exchanged, there can be a playful dimension.

This is the case, for example, of CryptoKitties.

It is a collection of digital kittens, which are collected as CryptoPunks … but who are also the protagonists of a video game blockchain where they can be bred and bred to create new CryptoKitties.

So the value of the CryptoKitty you own is related to the number of players, but also the rarity or popularity of its features (color, hair, size …)since they will eventually be transmitted to the new digital kitten that you will generate by making it reproduce.

Which brings us to the third ultra popular use of NFTs: the videogame.

Video games in the age of hyper-individualization

When a video game is “linked” to the file blockchain as in the case of CryptoKitties, the possibilities of monetization and of customization they are extremely large.

Thus, new games like Aurora Where is it Axie Infinite get you to buy your characters, which are unique, before you can play them.

Everything in a video game can be marketed And auctioned as NFT: a character, features, new customization options, new items, new missions, new game extensions …

From now on, in the ultra-standardized universe of MMORPGs (massively multiplayer RPGs)everyone can be unique, give your character a unique touchthat others will not be able to copy …

That is why the world of video games, which is the first entertainment industry in the world, is primarily concerned with the development of NFTs.

But here we have seen only a very small part of what is made possible by NFTs. The playful-artistic part.

Because there are much more concrete outlets for NFTs …

“Serious” applications of NFT technology

The world of ticket office is reversed by the appearance of NFT.

So now it is possible to issue airline tickets or concert tickets in the form of an NFT – the service is associated (your seat on the plane or in the concert hall) to your identity and we log everything in the blockchain.

Impossible to steal or usurp your identity: scan the QR code of the NFT at the entrance, as well as present your identity document.

This also allows you to resell your seat, by running a smart contract which will change the identity associated with the service as soon as a certain amount is sent to you: no more “black” auctions, but a secondary market capable of self-regulation.

It is also an opportunity to simplify the real estate sector: an NFT may contain a title deedwhich designates you as the owner of an apartment, house, plot of land, etc.

Blockchain has the potential to exclude agents, banks, notaries and lawyers when it comes to trading assets.

Today it is more of a question of uses and of pressure from these superfluous intermediaries which slows down the development and mass adoption of NFT e smart contracts exchange ownership of an asset on a peer-to-peer basis.

In general, NFTs allow for tokenization (i.e. associate ownership of an asset with a token) many real world resources and fight the counterfeits or the problems of traceability.

When the industry the logistics and supply chains will have seriously understood the potential of NFTs, we will use them everywhere.

Their only limit now is that of legal recognition.

As with tax matters, the recognition of NFTs as deeds of property is still non-existent and you know how public structures can be subject to inertia.

In the meantime, if you want to buy NFT, I recommend the more established platforms like rare, Offshore Where is it Super rare.

Who is Mark Schneider?

Marc Schneider is the founder ofArgo editions, a financial publishing and investment research company. Its free newsletter brings together more than 60,000 readers every week.

Ancient Risk managerMarc helps his readers understand the inner workings of investing in the stock market and cryptocurrencies take charge of your financial future.

His newsletter covers various topics: new technologies, cryptocurrencies, investment psychology or even geopolitics … with one common denominator: understand the world around us to better manage your finances.

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