NFTs: 6 Frequently Asked Questions

Digital artist Mike Winkelmann, aka Beeple, sold his NFT entitled “Everydays: The First 5000 Days” at Christie’s for more than $69 million. This piece of digital art is the most expensive NFT ever sold in auction.

It all started in 2007, when Winkelmann decided to publish a digital picture online every single day. Little did he know that 5000 days later, he would compile them together into one big image, and become a millionaire. 

We all hear these crazy stories about artists (Grimes) selling their NFT soul, or giant fashion brands (Gucci) selling a digital purse to an avid consumer at a higher price than the actual physical product.

To understand what this all means and how it works, we’ve answered 6 frequently asked questions about NFTs for you.

1. What are NFTs?

NFT stands for Non-Fungible Token. Non-fungible means unique, that can’t be replaced.

An NFT can be any kind of digital or conceptual content – images, videos, pixels, music, and even experiences or abstract ideas – that exclusively belongs to its owner and potential buyer. So theoretically, if it’s something that exists online, you can acquire it as an NFT.

2. What are the pros and cons of NFTs?

Pros:

You’re an artist, and your work needs a less traditional environment to thrive? NFTs are for you. The NFT marketplace is an alternative site to sell art that you otherwise wouldn’t have patrons for… Not to mention a bigger global visibility!

One of the main reasons that people buy NFTs is their sentimental value; It can be an NFT of a cartoon character from your childhood, or the tears of your favorite popstar. Hence owning an NFT doesn’t always have a financial advantage, sometimes it’s more of an emotional purchase. And they say love doesn’t cost a thing.

The most important benefit of buying an NFT is, of course, making money by reselling it. Such are the rules of investment 101.

Cons:

According to a Bloomberg article from April, the value of an average NFT is down by approximately 70% since February. Some consider NFTs to be a speculative market. That would mean that its growth and evolution are purely based on people’s projections of it in the future. 

Another downside of NFTs is that anyone can download the digital art without having to buy it. Then what’s the point of spending so much money on them, you ask? We still don’t have the answer to that question. One truth remains: the ownership of a particular NFT is exclusively its buyer’s and no one else’s.

“Everydays: The First 5000 Days” by digital artist Beeple.

3. How do I buy an NFT? 

The vast majority of NFTs utilize the Ethereum blockchain. So if you have cryptocurrency, you can buy NFTs. Easy! You can purchase them at NFT-specific marketplaces. Platforms such as OpenSea, Rarible and Foundation are currently booming with artists and brands selling their digital artworks and products for mind-blowing amounts of money.

4. What is the NFT secondary market?

As you may know by now, NFT’s primary market is when a random person buys an NFT from an artist on an NFT marketplace. The secondary market is when the buyer of an artwork resells it. And that’s where the real money is being made, because the resale price is usually higher than the base price set by the artist. Don’t worry, the artist gets a percentage every time the NFT is resold.

5. How do I create an NFT?

We’ll leave it to the professionals so we found a video that explains how to create NFT art from scratch.

6. Is the NFT world safe?

The raison d’être of blockchain technology is to avoid “double-spending”. Which means that a bitcoin holder cannot spend the same bitcoin more than once. Buying and selling NFTs uses the same principle. The artist cannot sell the same NFT to multiple buyers, but the tricky part is that there are no guarantees that they haven’t created different NFTs of the same artwork. 

Since NFTs are still new, rules and regulations are just being set recently. For example, you can sue an artist for selling the same artwork to several buyers on different blockchains.

In conclusion, the business of NFTs is a fascinating universe, and it’s only at its beginnings. Is it a bubble that’s going to burst? Or will it keep growing and entering different industries? No one knows what the future holds. All we can do is observe, analyze, and even ride the wave and join the adventure!

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