NFT is one of the booming topics right now and for you to be here that means you have tried to understand the concept but everything seems so gibberish. But don’t worry this article will be explaining NFT in details to you in simple words that will make you understand NFT like a five-year-old child.
Understanding NFT like a five-year-old child
What is NFT
NFT simply means “Non fungible tokens” it is still not making sense, right? You are like what is Non fungible and what is token. Now to make you understand the simple NFT term like a five year old, firstly just know “Non fungible,” is just an English word, and it simply means “one of a kind”, that is only a version of it exists. Money are fungible, meaning there are thousands of 1$ notes printed. You can exchange 1$ note with another 1$ note and you will still get the same rate or value. However, Let’s say you have the Mona Lisa Painting, then that is Non-Fungible! because only one of the original painting exists. If you exchange it, you can’t get the same original Mona Lisa Painting again. Any other version you get will have to fake or a duplicate.
“Token” on the other hand, can be described to be thing , that represent or stands for something like a ticket or card. Therefore, if you put the two together it can be simply defined as a “one of a kind” real representation or a ticket of a certain digital piece of art. Now, NFTs can come in different form of an ART, the more it is an ART. We have PICTURES, MUSIC, VIDEO in as much it is any style of art or piece created. These ARTS created are what we refers to NFTs itself. You don’t have to add anything to these ARTS, they themselves are the NFTs.
For you to understand NFT like a five-year-old, think of NFTs as a virtual art gallery. Art gallery is a physical collection of Artworks. For example, the Doual’Art Gallery in Cameroon or the Johannesburg Art Gallery in South Africa.
Now, if you know what they do in Art Gallery, it becomes easier to understand. Art gallery create Arts, bid arts, holds exhibits, collets these arts and sell them and every other thing they do in a physical Art Gallery.
What are NFT Used for
NFT are mainly use for making money. There are different parties involved when it comes to NFT world. The three main parties are the Creator/Artist, Buyers and Collectors
Creator/Artist: They are the ones who create the Arts (NFTs)
Buyers: They are the ones who buy the arts and immediately they purchase them, they resell them again once they notice the price or the value of the NFT has increased in other for them to make their profits.
Collector: They are the ones who buy the arts and keep for long-term. Maybe they hope to sell it in the future or they just like having it in their possession.
Now as Creator you make money by creating a Collection of different NFTs. In the NFTs space, collection of different NFTs by a Creator is called PROJECT. Nevertheless, some creators just sell one single item but most creators create a collection of NFTs. Being a Creator, you create huge awareness about your project and list each of the NFTs in your collection for a price you set it at. Therefore, when a buyer sees, he buys it and you make your own money.
A Collector or a buyer on the other hand makes their money by purchasing an NFT, then reselling it. As a Collector or a buyer, you become the owner of the NFT when you buy it and you decide the price you want to resell it, just like when you buy the original MONALISA painting and you resold it for a higher price that you bought it for.
Parties in NFTs space also gain money when NFTs are resold. When NFTs are resold from one person to another person, each person who has ever hold that particular NFT gets a particular amount of money, just like a royalty.
One other factor, NFT are use for apart from making money is that, as a buyer or collector of a NFT, you have access to benefits from the Creator of the NFTs.
Creators who are celebrities, like musicians may decide to give the holders of their NFTs free access to their Live physical concerts and shows. A good example also is a certain Airline that offers extra meals and other services to holders of their NFTs.
A popular school may decide to be an NFT creator and states that any parents or students who buy their NFT won’t pay school fees for the next two terms. Therefore, since anyone can be a creator, then any form of benefits can also come along depending on who the creator is.
How to Market NFT
Now, that you can understand NFT like a five-year-old child, it is paramount you understand where to buy and sell the Arts in the Digital world. The world where NFTs are sold is called MARKETPLACE.
Marketplace: They are the “Art Gallery” where you can showcase, bid and buy your NFTs. For now, at the point of this writing, the most popular NFT MARKETPLACE is called OPENSEA.
Nevertheless, there are still other marketplaces existing on the internet. We have SOLANART, BINANCE NFT MARKETPLACE, RARIBLE and so on
If you want to be a “Creator” you go to these Marketplaces to display or exhibit and sell your NFT and if you are a buyer or collector, you buy these NFTs.
It is preferable you know the type of NFT you want to buy before entering the Marketplace as a “buyer” or “collector” so that you get confused by the numerous NFTs you see in these Marketplaces.
Cryptocurrency: Not forgetting that NFTs are like virtual art gallery and when you visit a physical Art Gallery to purchase an Artwork, you definitely hold your money. Now, cryptocurrencies are digital money you use in the digital Art Gallery of NFTs (MARKETPLACE). Each marketplace also has their various different Digital Money which they accept. When you visit these marketplaces, they specify the digital money or cryptocurrency they accept in other for you to display/exhibit or buy an NFT in their space.
For instance, OPENSEA only accepts ETHEREUM, BINANCE NFT MARKETPLACE accepts USDT, BNB and BUSD, While SOLANART trades with Solana.
How do NFTs Create Value
NFTs are Non fungible that is, ONLY one can be authentic just like there is only one original Mona Lisa painting. The originality of ARTS in a physical art gallery creates its value. It is also very similar with NFTs, but in NFTs you can’t even sell replicas because NFTs space have what we call the Blockchain Technology.
The Blockchain Technology is like the engine of NFT space, without it the originality of NFT can’t be checked. Now, to understand like a five-year-old, the Blockchain technology makes sure when an NFT or a digital Art is created it stores it up. There by, serving as a ledger or a sort of record keeping book to show the originality and the authenticity of an NFT.
It gives a unique number to each original NFTs ART and also show all the information about the NFT. Information about who the Creator is, who the current owner is, the history of how the NFT was created or made and various prices it has been sold for.
Furthermore, the Blockchain technology has one incredible feature that makes it more special. It is available to the general public. That is everyone can access it and the information there. Therefore, if somebody claims to own an NFT, all you have to do is check through the Blockchain to see whether the person speaks the truth.
Terms in NFT
All areas of life have their own language and specific terms used. Same with NFT world. Some of those terms includes;
It simply means “a particular collection of NFTs”. To understand NFT like a five-year-old child, imagine you have like twenty pictures of your favorite pet dog named Alex, and you then exhibit all together on the marketplace. Of course, it may be pictures of various pets(cat, dog, rabbit etc.) you have, or pictures of various pet dogs you have but when you exhibit them all under one particular name you give it, it is called a PROJECT.
It simply means the added value that comes with purchasing an NFT as a collector or buyer. Just like the example made earlier in this article on a certain Airline who decides to give extra meals to the holder of their NFTs. This is how utility works, and don’t forget value could be anything.
It can be defined as the lowest price you can purchase or buy an NFT in a particular Collection of NFTs(PROJECT). To understand like a five year old, let say the least price after you exhibited your favorite dog twenty pictures is $5, that is others are higher than $5 but $5 is the lowest
This is when Creators launch or exhibit their NFTs on their personal website before exhibiting or launching it on marketplace. Therefore, people who have access to their website can buy it there but it goes on marketplace which may become more expensive.
This is when someone buys a fake NFT. If someone creates or exhibit a fake or duplicate of a real NFT, saying he is the owner and you decide to buy it, then it means you have been rug-pulled.
Truth be told, a lot of NFTs won’t do well or last but NFT is here to stay and it can work for anyone. Though it seems to favor celebrities the most, all you have to do is find the correct ART that people will be interested in buying and also create awareness about your project.
To create a successful project where people buy your NFTs for whatever prize, you have to create enough awareness or interest about it in the NFTs world. Let people know a project is coming up and they are to gain a lot of utility from buying it because in the long run if no one buys your NFTs after so much planning and investing (you pay to list your NFTs on marketplaces), it will be regarded as a failed project.