What is NFT?
In general, this is my least favorite topic so far, since I am a grandfather and do not always understand how a jpeg can cost hundreds of thousands of bucks. But still, I was deepened into this topic and in this article we will analyze it.
In our usual format, let's start with an introduction. The NFT has become a threshold for entering crypto for a huge audience. Almost everyone was discussing pictures for millions or sneakers for tens of thousands, which pay off in a month. There are really many such stories, but few of this crowd even understand that this is not jpeg, this is a whole technology that deserves attention.
NFT (non fungible token) is how you can transfer non-fungible tokens. That is, by exchanging one $Bitcoin for the second, you exchange two bills, which simply mean that you have 1 bitcoin. In the case of the NFT, it is not just a token that can be exchanged for another and it will not mean anything. It means ownership of something, that is, you have ownership of this picture, by selling it, you are selling the right to it to a greater extent.
I understand that at this stage, NFT is just pictures, but in the future, this is the exit of crypto from finance to the real sector. Think about it, by selling a car, you're just exchanging your NFT with car rights for X USDC. Or you follow the same procedure with a house or apartment, this in fact replaces a third party, which in these cases is usually played by a notary.
Since many factors in terms of at least security are lame, NFT cannot yet perform such functions, but I am sure that this is the vector of this technology. In the meantime, we can be content with pictures of monkeys for hundreds of thousands of dollars. True, the rate of $ETH fell under and we can see prices at a nicer, but nevertheless, very expensive for cards.
In terms of jpeg, the technology has advanced further and the ICO mechanism described in the previous article was invented. It is referred to as a mint. That is, you already know what the picture looks like, it has a price for which you can create it and a limited edition. Usually the hype for good collections is about the same, they are sold out in 0.000001 seconds. You get a generated picture of random rarity (if there is one in the project) and at the end of the sale you can put it on the secondary market, where you can inflate the price. Why does it work like this? That is because there may be 100,000 applicants, and a circulation of 2,000 NFTs. And, accordingly, some of these 100k people believe in the project and are ready to buy it for a higher price. Yes, the honesty of mints suffers because of scripts that can be made and endure all mints, but that's a completely different story.
Accordingly, we get a real ludomania, which has even more risks than ICO, as well as more profit. But it is always difficult to determine a fair price, since if ICO startups can be somehow evaluated. In NFT, the picture changes very much and it becomes extremely difficult to determine this. Understanding which collection will succeed is much more difficult than understanding which project. I’m generally silent about a fair price, but most mints shoot, which is why it’s profitable. But as I said at the beginning, I am a grandfather and for me it is a complete gamble, where I have not yet climbed in depth, which I would advise you too. But you must study this topic in more detail and decide for yourself.