Skip links
What The NFT

An Intro to NFTs

NFT what?

Learn about NFTs

An NFT stands for Non-Fungible-Token. 

Immediately we bet you’re thinking, What the NFT?

We got you!

The words Non-Fungible means unique, one of a kind, irreplaceable, a bit like we already know you are!

Token is just a fancy word to say it is one item.

So put them together – a unique, one of kind, irreplaceable single item.

Now that the boring terminology is out of the way, let’s talk about what NFTs actually are. 

NFTs are most commonly traded in the form of a digitally artistic image, but can also include music, the written word, and essentially anything that can take digital form. 

You might think NEED is a strong word. Here’s why you at least WANT an NFT!

NFTs are quickly becoming a way to find your perfect representation of who YOU are. There are abstract NFTs for the days when you might feel “non-specific” and for the days you do, there are NFTs of all sorts of “spirit animals” as well as artistic impressions of pretty much any kind of “style” your mood dictates.

With each NFT you own, you get access (membership) to what’s referred to as a community (mostly other membership holders) where like minded people get to communicate on a global level about common interests. These common interests are usually a result of these people being attracted to what the NFT Project is aiming at achieving.

This is called a Roadmap.

Contained in this roadmap is a series of commitments made by the Project to its community and acts as a summary of what the Project is looking to action at different points of its journey. It can include benefits that are both virtual (usually called Web 3) and real world (what we normally call Web 2). They can be discounts, bonus access, physically awarded items, or simply financial kick-backs. These benefits are usually referred to as the “Utility” of a project, meaning what uses does owning it bring.

This is usually one of the most interesting parts of an NFT Project, and can really help answer if it resonates with you and if it does, can also answer why you NEED to be one of its members.

So you might be wondering why everyone is talking about NFTs?

NFTs are a modern and innovative alternative to more traditional art forms, they are published and traded online through the blockchain. Therefore, NFT art is more accessible than traditional art. You simply browse your chosen marketplace (e.g. OpenSea or Nifty Gateway) and make a purchase online instead of having to visit a number of art galleries in person to find the piece you want. 

Furthermore, the opportunities for aspiring artists are wider here as anyone can publish their own artwork to be sold online to a large audience. In addition to this, and differing to the traditional art market, is the recurring revenue an artist receives as royalties each and every time their NFT is sold.This is an area that artists have never been able to see recognised prior to NFTs. 

The majority of NFT projects will also have corresponding social media platforms (e.g. twitter or discord) that bring awareness to the project and its visions within Web3. From this, communities are built of people who share these same views and aspirations. For example, many projects aim to raise awareness and provide support for charitable organisations through their NFT projects and the profits made. 

So, NFTs are an innovative and inclusive method of purchasing and selling artwork that can also provide support to the wider community. 

This question is not as clear cut as a “Yes” or a “No”, and here is why. 

The very definition of the word investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in the value of an asset over time.  

There are multiple factors that affect the investment potential of an NFT. Value can also come down to what benefit they provide each individual person. 

Factors such as utility, art style, community behind the NFT, roadmap benefits, brand associations, etc. all play a role to define value, both financially and from a self-fulfillment point of view. Sometimes investing in something that makes you happy is just as beneficial as a financial gain.

From a purely financial point of view, like any asset, NFTs are subject to market forces. These can include:

  • Overall downturns/upturns in NFTs generally caused by large macroeconomic factors (which may be real world or crypto-specific).
  • The release of information about a particular NFT or its competitors including:
    • Partnerships (generally good), 
    • Unexpected costs (bad), 
    • Spending on roadmap items (good), 
    • Favourable reviews (good), 
    • Purchases by a reputed NFT investor (good). 

In fact, just like traditional financial markets, all information sources can affect the value of NFTs and where information is freely available, markets take that information and translate that to changes in supply or demand of a particular NFT on the open market.

The most common advice heard in this space is that it is important to Do Your Own Research (DYOR). 

And it is very true. 

Educating yourself about various projects and their future plans plays a large role in speculating which projects may be likely to succeed against those that may be lacking certain “investor attracting” elements. Those that do the hard work of researching projects are more often the ones that make sound investment decisions.

So, while the question about whether NFTs are a good investment is not an easy one to answer, it does highlight that there are many contributing factors that go into the final choice. 

One set of factors remains clear above all else – the NFT space is still relatively young. Over time, there will be more entrants and an increased demand for NFTs in general. It is a space that will see innovation and real-world use. The better prepared you can be, the more likely you will be to make a well informed decision about projects you’re interested in investing in.

When purchasing an NFT from one of the many marketplaces out there, you are paying for a token that represents a unique item on the blockchain. You might be wondering why people are paying millions of dollars for something you can just “right-click save” but essentially you own a piece of digital art that is exclusive to you.

I’m sure you’ve heard of the Mona Lisa, the original is valued at $800 million because it is the only one in the world painted by Leonardo da Vinci. Sure, you can buy a replica off Amazon for $10 but it is not the same as OWNING the original.

Whilst many NFT projects are solely for art, others come with additional rights and utilities. However, this depends on which projects you choose, so it is important to do your own research (DYOR) before investing to see if it and what extra utilities it comes with. 

For example, Bored Ape Yacht Club (BAYC) is one of the most popular and spoken about NFT projects out there. It is also, at the time of writing, the most costly NFT being traded. When you own a BAYC you get a “Yacht Club” membership which grants you access to;

  • Community Events – this includes access to “holder’s only” giveaways and games within the discord where you can win NFTs and other cool items.
  • The Bathroom – this is another member benefit where holders can paint one pixel every fifteen minutes on a virtual bathroom wallet. The bathroom doesn’t offer anything else other than a community drawing board. However, just like the other club benefits, it helps keep collectors interested in the project and its universe.
  • Commercial Rights – this means that the holder can also use the BAYC they own on any merchandise. For example you can put your Ape onto a t-shirt and sell it.
  • The Club – this is a club for BAYC holders only which includes many high-profile celebrities you can interact and speak with.
  • Airdrops – the project will send out NFTs to random BAYC owners as a thanks for investing and believing in the team.
  • Free Mint BAYC holders got the chance to mint a follow on project for free. 

Many of the examples above are also included in the utility benefits of many projects on the market, and it is crucial to assess the value of “What You Get” as part of the entry cost to a project.

Ready to learn more?

View our NFT Glossary

Learn about the definitions of words and phrases used within the NFT industry…

Learn Now
This website uses cookies to improve your web experience.