Welcome to the NFT Bootcamp Part 1, where you will learn the fundamentals of NFT’s. Whether just trying to figure it out or are exploding with new NFT ideas, you are not alone. This is a fast-moving, emerging area with hundreds of millions trading. However, in the crypto winter of 2022, many things have changed. The above picture of a Bored Ape – which mistakenly sold for$3000 instead of $300,000 – is indicative of what most people know, and do not understand about NFTs: How value is created, the importance of community, the role of historical firsts, the absurdity of FOMO, the evolution of utility and so on.
Let’s start with the basics: What is an NFT? Here are some key definitions to know.
- An NFT is a unique digital identifier recorded permanently in a smart contract on the blockchain.
NFTs are often called non-fungible, or one-of-a-kind, to distinguish them from fungible tokens, such as currencies in which all of the tokens are the same and interchangeable for the same value.
The key purpose is to certify the record of ownership. When someone purchases an NFT, they typically do not have full copyright for the item they own. If the NFtT represents ownership of a digital asset, that asset, that asset is also not stored on the blockchain. A digital asset represented by an NFT can still be easily copied. The purpose is actually the permanent record of ownership.
NFTs provide the record of ownership from the original author of the brand or art in three ways:
- Proof of authenticity – that it came from the original creator and is not a counterfeit
- Proof of ownership – that the work is not bootleg or stolen
- A permanent record of this proof that cannot be altered
These proof adds value when the item is resold.
NFT’s are also powered by smart contracts, called “smart” because they do extra things that a typical written agreement does not. First, a smart contract is written in software code and automatically executes the agreement when pre-established conditions are met. This means the buyer and seller never have to meet, it is a fully automated transaction. Second, it records the transaction on the blockchain, creating a permanent record.
Here is a video to review these basic definitions:
The largest marketplace by far for NFTs is OpenSea on the Ethereum blockchain, the inventor of the smart contract. OpenSea still hosts about 80% of the 2022 NFT market, $5 billion in volume in 2021. In fact, it posted a volume of $1 billion a month through January 2022 before collapsing by a couple hundred million is month in June 2022. The founder of Twitter, Jack Dorsey, sold his first Tweet for $2.9 in 2021, but the new owner was scrambling to sell it for $21,000 a year later.
The markets have diminished but not evaporate, and they are shifting towards utility and questioning if the 3% adoption of crypto wallets in the U.S. is worth the expansion to a worldwide marketplace.
So part of this course is going to talk about valuation after the initial hype and fomo. What are emerging sectors? What kind of marketing will you need from a cold start? Where does value even come from?
Module 2 looks at some of the most common misconceptions from discussions in our live classes. For creators is is an essential module to understand.