(this image is minted on @nftshowroom there are 3 copies, two of them are for sale )
@termitemusic asked me to write him something to explain what exactly an NFT is as he wants to explain it to his readers/listeners. Of late NFT has become a buzzword ( although as I learned from @juliakponsford they have been around since 2014) but what exactly are they ? A NFT is a digital asset with an indestructible (as long as the blockchain it is on exists ) unique signature. But to go into detail let's break it up into pieces, to make it clear to all that are new to the NFT, blockchain, crypto digiverse.
The Name
What does NFT stand for? It stands for non-fungible token. So what exactly does non fungible mean well something that is fungible is something that is easily replaced. Example you have the midnight munchies and steal your brothers stash of salt and vinegar crisps. Obviously that is sort of a dick move but you can easily go to the store next day and get him a fresh pack to make up for it. This makes those yummy crisps fungible. While the bag of crisps is obviously not the same bag, it is however easily replaceable and exchangeable.Other example, $10 can be exchanged for 10 1$ notes or one once of gold can be swapped for gold of the same weight, again it is easy to replace.
Something non fungible is thus the exact opposite. It is something that is either a completely unique solitary or limited edition item. Like the sweater you made for your grandmother in 4th grade or your limited edition baseball card.
So now that we have the non fungible part out of the way what exactly is a token? Well on the blockchain a token is a unit of currency. Example one $bitcoin is one unit on the bitcoin blockchain here on hive it is one $hive. This is how we sell and buy individual crypto currencies on their respective chains and on the exchanges. So in case of our NFTs we create a non replaceable digital token on the respective blockchain.
How does my unique creation become non fungible in a digital space?
So Let's say you want to sell 5 editions of a digital art piece as NFT. Obviously we know that any halfway proficient internet user can steal whatever file they like online. So no the artwork itself is obviously not the non fungible part of the NFT. What gives your artwork worth is the token attached to it. It is like a digital signature that cannot be forged. A real world equivalent would be the limited edition art prints artists sign and sell of their pieces. Picasso used to do it all the time. Auntie Glupta can go make 100 prints of Picasso's blue phase artwork in a copy shop and sell them but they won't be worth much. Picasso's prints on the other hand might be worth a few thousands these days, like this one sold at Sotheby's which he made 200 copies of.
So the worth lies in the signature and also in how many copies are minted. A single edition will be perceived as more valuable than a 5 edition piece. the five edition pice will be seen as more valuable as the 200 edition piece ect.ect.
Yes there is somewhat of an honour system involved in NFTs while the signatures themselves are non fungible and the asset themselves are minted in a limited undeletable number, technically people cannot stop you from being a schmuck and minting copies of the same piece on multiple platforms and minting new limited editions of the same on the original platform as well. However that kind of behaviour will get you blacklisted on reputable platforms and people will get wind of it and never buy from you again. That being said this specific problem is not only a digital one you have artists who sometimes do this with physical prints also and people get really mad about it as each new round diminishes the worth of the previous ones. So in truth no matter how secure things are there will always be a select few who will try to screw people over its sadly part of life.
Where can I find/sell these NFTs?
NFTS are hosted on different sites and on different blockchains. We on hive for instance have @nftshowroom Which hosts primarily art and videos in their gallery at the moment, but is starting to expand into animated tunes music and photography. Then there is atomic wax which is on EOS and Opensea which runs on Ethereum to name a few. New platform are popping up each day some very effective some a bit shady so it is good to look into where you host your assets before jumping in.
unique perks and quirks of NFT platforms
artist Tyger Tyger get it here
Depending on the platform you might have to pay a "gas fee" for the NFTs you put up for sale. It varies for each platform. Let's use NFTshowroom as an example.. How does the minting process work there? On showroom you first create categories that are called collections. For example if you want to to make different paintings of dogs, you can group them into a collection called Pooch and put all your dog artwork in that one collection. Now let's say you make a painting of a fat bulldog eating a doughnut. First you list it under the collection pooch, then you decide how many editions of the bulldog you want to mint. Choose wisely because as we mentioned you can't go back and make more of this piece once it is listed. During the process you also set the usage rights of the piece.Showroom gives you two options, either private (meaning people can use the piece for their private enjoyment and use) or limited reproduction which means that the person buying it can sell prints, sell T-shirts with the image for example.
So back to the "gas fee" Taking our bulldog lets say we want to make 3 of them the first edition will cost you 5 5 $swap.hive (which is a sub currency for showroonm on the hive blockchain), and any extra edition will cost one 1 $swap.hive. so fat bulldog will cost you 7 $swap.hive in total to mint. However once minted showroom does not get a cut of your initial sale the money you make is all yours. Other platforms like wax do not ask for a "gas fee" but take a percentage of the sales instead, it all varies so it is always important to read the TOS of the platform you use to understand their process. Some platforms do not only give you the option to sell your work but also do in-platform auctions, while others do not and you might have to use an outside auction house to do this and then transfer the piece to the winning bidder, all things you need to consider when you chose the platform or platforms that are right for you.
A really exciting feature with NFTs is that most platforms give you a part of the profit if your NFT is resold. How much of it you get varies by platform, some let you set it yourself some have fixed percentages. Which means that art brokers need to read the TOS of the platform carefully and take that in account when buying and reselling art. NftShowroom for example takes a 10% commission on art resales and pays half of that (5%) as a royalty to the original artist. This resale royalty is really a game changer for artists, think about it. In the non NFT space once you sell an artwork you are done. Even if your artwork is sold for millions down the line, you are still eating bread and butter in your atelier while some fat art broker is driving a Tesla and has a 3 Michelin star chef. The NFT world is a game changer in that regard, this is why new NFT spaces are being created almost daily and what is being sold as NFT is expanding as well. This is exciting but also means that with the good there also comes the scam. Researching and choosing your platform wisely is the key to NFT success.
What can I sell as NFT?
artist @xxxthorxxx get it here
Let us reiterate, what makes the NFT valuable is the digital signature, this means that technically you can tokenise anything you want, from music to visual art, from limited edition digital content for games to card collectables, or royalty rights to music , games and independent films. But you are really not limited to digital items only. Technically you could sell your pimped out airbrushed car as an NFT. You would list a picture of it on the platform of your choice and that picture of that car with the accompanying text stating the sale of the car would become the contract sealed by the NFT mint. Like with artwork if that cars gets resold the original lister will get a percentage of the sale in perpetuity. the possibilities are endless, it's the wild west out there and it is pretty cool!
However, because there are no regulations on how and what is sold (out side of the individual platform rules) people need to be adults about how they purchase and research what is entailed in the contract. Don't go assuming you are going to get that car if there is only a picture posted and the car itself is not listed in the description. The description is the contract anything not listed in it from shipping costs to physical item is not a given and /or not part of the contract. So if there is a picture of a sweater but no real description you can be pretty sure you are buying just that picture and nothing more. Be smart about this.
Compare before you buy, research your rights
artist Tyger tyger get it here
I cannot stress how important researching what is entailed in your NFT is. Digital property is great but you need to also understand what makes it valuable and what makes a deal good or horrible. In the case of visual art it is pretty straight forward, how good is the art in your opinion, how many editions are they and do you have reproduction rights ( and if yes how far do these rights go). With other things like music it can get more confusing.
Take for example all the music NFTs that are sprouting up these days. They are not all created equal nor does the blockchain protect every aspect of them. So if you sell but the mp3 with the artwork in a limited edition what does this mean for the buyer. The most straight forward thing would be to see it like a signed copy of an album, but some artists like myself take it a step further any music I put up as NFT you might be able to find on streaming platforms like Audius, Soundcloud or youtube but it will not be for sale anywhere. Other artists see it just as the signed copy and might sell it on other platforms without the digital signature. Theoretically you could create a song that only the buyer will ever own and or /hear in it's entirety there are so many options.
Some artists include a percentage of a song's royalty in their NFT or are auctioning off said royalties. This is not a bad idea per se, but people have to be aware that the blockchain will not protect you from copyright infringement. This means that while the NFT contract is a valid contract and is indestructible as long as the specific blockchain exists, you will still need to use legacy platforms like ASCAP, GEMA ect to enforce your copyright and track your media plays. This is something not everybody understands and they think those royalties will magically just find their way into their bank accounts. Also some of these royalty NFTs include a detailed legal contract others don't and this can get dicy if the seller is inexperienced or out to defraud you. So again NFTs are amazing and the versatility give boundless innovative possibilities, but it also is connected to risk if you are not willing to do the work to protect yourself. The NFT Space is as I said earlier the wild wild WEST and it is filled with adventurers, gunslingers, whores, innovators and thieves. Make it your own but keep your eyes open and your finger on that trigger ...
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(Image credit Dave Renike and a portrait of the late loved and so very missed jubilee made by myself turned into this here universal truth meme)
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