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What the… is an NFT?

by , 11 March 2021
What the… is an NFT?
Q "There's been a huge craze in the media lately with people investing and making a living through NFTs.

Do you know what an NFT is and can you provide some examples?"

 
A. I've been waiting for this question to come up. NFTs are something I am very passionate about…
 
And yes! NFTs could revolutionise the world of art and art investing.
 
Let me start with what an NFT or Non-Fungible-Token is. 
 
Basically, an NFT is a digital asset that can be created bought, exchanged and sold from a variety of unique items.
 
Let’s break that down…
 
A digital asset is an item that is created and stored on a computer or a mobile device. 
 
Nearly anything can be considered a digital asset nowadays including:
 
Sports or gaming cards
Photos, images or GIFs (animated videos)
Music and art
And even Virtual real estate and clothing.
 
Next week, I’ll write an article on how NFTs work and how to buy, sell and profit from them! So, make sure you set a reminder for 15 March 2021, Monday.
 
________________________________________
 
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Bitcoin has surged past $53,000 - the second all-time high in a matter of days.
 
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Understandably, it's been dominating headlines.
 
But listen - I'm not here to waste your time with the obvious story.
 
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________________________________________
 
Q. "In your trading webinar you mentioned NFTs are non-fungible-tokens. What exactly is the difference between fungible and non-fungible?"
  
A. Great question. And I think once you know the answer, it'll make NFTs so much easier to understand.
  
A fungible item is something that can be replaced or exchanged for something else.
 
For example, money and precious metals. 
   
The R100 note you have in your pocket is worth the same value as the R100 in my pocket. 
  
Even if you crumpled it up, rub it in dirt or let it accumulate dust, it would still be worth R100. And more importantly, you can replace it for another R100.
  
An item that is non-fungible is the complete opposite. 
  
Each item is unique and can't be replaced or exchanged for another item. 
  
Think of a collectible such as a painting at an auction. Each painting is an original that is assigned a value and can't be replaced. 
  
NFTs are non-fungible because each digital asset that is created and put onto the market place (e.g. SuperRare, Rarible) is assigned the value by the creator or the buyers and sellers. 
 
This gives freedom and flexibility for artists to finally shine and be able to sell their digital art pieces.
  
I should also mention - They will receive a percentage of royalties each time their digital art piece is sold
 
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________________________________________
 
 
Q. "Timon from what I read about NFTs, isn’t it easy to just screenshot an image of the crypto-art piece and call it yours?  So why is an NFT so special and valuable?"
  
A. This is one of the big debates going on about NFTs…
  
In fact, I saw it on Bloomberg, just yesterday with Jim Cramer. Allow me to explain the genius behind this concept.
  
If you go to the Museum of Modern Art in New York City and take a photo of the painting 'Starry Night' by Vincent Van Gogh, can you say you own the painting?
  
No. That photo on your phone will be worthless. That's because we know where the original painting is and who owns it. Therefore, we can track the original painting. 
  
The same apples to NFTs...
  
When you create, buy or sell an NFT, on the blockchain, it is carefully designed and programmed to have the item traced, verified, valued and stored.
  
And if you use an NFT platform, not only will you have a huge marketplace of people bidding and buying your items, you'll also receive royalties of over 10% when they sell it to someone else. 
  
And so, anyone can take a photo or have a copy, but only one person can own it and distribute it at a time for a profit. 
   
Trade well, 
 
Timon Rossolimos,
Analyst, Red Hot Storm Trader 


What the… is an NFT?
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