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Non-Fungible Tokens or “NFTs”.

You may have first heard of non-fungible tokens when you saw that a visual artist sold one of his NFTs for $69 million. 

Or perhaps after you scrolled on TikTok and saw that pictures of cartoon apes are selling for hundreds of thousands of dollars.

If this is your first time hearing about NFTs, you’re probably now asking yourself, “why would someone spend thousands of dollars or more on a digital image, when they can just take a screenshot of it?”

That’s a really good question and a valid point.

The world of NFTs can be confusing and overwhelming when you first try to wrap your head around it. 

So, hopefully, this guide will be able to break it down for you in a digestible way. 

Let’s go down the NFT rabbit hole and figure out what NFTs are all about then, shall we? 


What are NFTs?

Let’s start with a simple, surface-level overview.

NFTs are digital assets that live on a blockchain. You can also think of them as digital collectibles that can be bought, sold, and traded with others through the blockchain.

For those familiar with collecting physical items such as Pokémon cards, Funko POPs, Beanie Babies, or even postage stamps, the idea of spending money on what might seem like trivial items will make more sense.

But before we talk about where the value of an NFT comes from, let’s address an important question: what makes an NFT a digital asset? 

Well, an asset is something that can be owned by an individual. And digital assets already exist in our world, even if we can’t physically touch them. Take, for instance, .mp3 files, eBooks or PDFs, and photographs or images stored as .jpeg files. A digital asset is simply anything that has been created and stored digitally, and has value.

However, the issue with digital assets is how to prove ownership. 

Physical artists can leave physical marks on their work to prove that it is original. But how do we do that with our digital creations that we make online in a world where deep fakes and image manipulation are prevalent? 

_The answer: blockchain and crypto wallets._

There is a misconception that you can just take a screenshot of an NFT and claim that you own it. Think about people on Instagram who post photos of themselves next to a Porsche claiming that it is theirs. Just because it looks like they own it, doesn’t mean they actually do.

The blockchain enables anyone, anywhere to verify whether someone truly owns the digital assets. This can be done through NFT marketplaces like OpenSea or blockchain explorers such as Etherscan.

There are also ways to check the authenticity of NFTs such as a blue checkmark on OpenSea. This indicates that the NFT was part of an original collection.

> **Note:** A blue checkmark does not guarantee that the NFTs are “valuable”. It just signals to people that this is the correct collection versus the copycat collections that try to scam people into buying a copycat NFT. ✅

So, your wallet address verifies your ownership of an NFT on a particular blockchain. 

There are currently two blockchains you’ll often hear about when it comes to NFTs: Ethereum and Polygon. 


NFTs as digital collectibles

Still, you might question what you can do with an NFT since it only exists digitally. 

You can drive around with a Porsche, but you can’t exactly do the same with an NFT.

Is it simply just a digital collectible?

Well, not quite. Some NFT creators might add redeemable perks for token holders of their collection.

Here are some factors to look out for in an NFT project:
- Physical redeemable goods 
- Access and Utility
- Community
- Intellectual Property

Let’s take a closer look at each one.

### Physical redeemable goods
Billy saw their favorite luxury brand had created an NFT collection.

They launched the collection with 500 NFTs that displayed a looped video of a limited edition shoulder bag.

The creators of the brand recently announced that all token holders of this NFT can redeem the physical version of this shoulder bag if they choose. 

Interested in owning one of these bags, Billy downloaded the video and was excited to receive their limited edition shoulder bag shortly.

But Billy never received their shoulder bag. 

Why was that?

> Because simply downloading the video didn’t mean they owned the NFT. As per the advertisement, you needed an NFT to redeem the luxury shoulder bag. 

If Billy had purchased the NFT instead of just downloading the artwork that represented the NFT, they would have been able to redeem the shoulder bag as promised.

Another thing to note is that there are only 500 of these NFTs created (in supply). Thus, there will only ever be 500 physical versions of these shoulder bags available.

Token holders will get them along with the NFT they purchase, but others who want to get their hands on one can only get them from the secondary market. 

For some people, this scarcity of supply (only 500 ever created) means that the NFT is more valuable.

Several things are going on in this example here. First, you might be able to unlock physical goods for owning the NFT. Several existing NFT collections have done this already. Here are two examples:
- Owning a Gift Goat from the [VeeFriends Series 1 collection](https://opensea.io/collection/veefriends?search[sortAscending]=true&search[sortBy]=UNIT_PRICE&search[stringTraits][0][name]=Character&search[stringTraits][0][values][0]=Gift%20Goat) (launched in 2021) will allow token holders to receive six physical gifts per year for three years. 
- The [FEWOCiOUS x RTFKT NFT](https://opensea.io/collection/fewocious-x-rtfkt) is a looped video of a digital sneaker, but each NFT purchased comes with a physical pair of sneakers.

The RTFKT example is a very interesting case. Not only is it an extra perk for being a token holder of the NFT, but it also enables a new way to combat counterfeit goods.

In this case, 1 FEWOCiOUS x RTFKT NFT = 1 redeemable pair of sneakers.

#### An Example of NFTs: RTFKT’s Recent History

RTFKT Studios was acquired by Nike on December 13th, 2021. This acquisition was not entirely surprising, given that Nike had been working on a concept called "CryptoKicks" for some time.

In 2019, Nike filed a patent for a system where a physical shoe would be tied to digital assets on the blockchain. This was to counter illegal, fake Nike shoes being produced in different areas of the world. With CryptoKicks, consumers would be able to prove that they own the authentic Nikes by possessing the accompanying NFTs.

This is just one use case of a traditional company aiming to use NFTs as a way to drive ‘utility.’

### Access and Utility
Now, let’s look at access and utility.

Some NFTs serve as access tokens to virtual and physical experiences: getting into a restaurant, a virtual or physical conference, a music festival, a basketball game, a meet-up with a celebrity you admire, or something else. 

Here is an overview of several existing access and utility NFTs:

**VeeCon:** An exclusive 3-day web3 and cultural conference. VeeFriends Series 1 NFT holders are given access to the conference in 2022, 2023, and 2024 through an airdrop. 

That’s right, if you purchased an NFT, you got access to this event.

![image3.jpg](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image3_a64c631797.jpg)

Here is the World Of Women team at VeeCon 2022, and many of our community members (who are also VeeFriends holders) got to meet us there. 

**FlyFish Club:** The first restaurant that only allows holders of a Flyfish Club NFT to dine at their restaurant in New York City. Token holders can also rent out their NFT for a month as a means of passive income. 

![image6.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image6_d81c7551df.png)

**Coachella Collectibles:** Coachella launched a collection that gives lifetime festival passes, on-site experiences, and physical items.

![image5.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image5_fa084620c7.png)

**NBA All-Star VIP pass:** The NBA collaborated with NBA Top Shot to create 1/1 NFTs for each team in the league. Token holders of these 1-of-1 NFTs have VIP access to the next 5 NBA All-Stars from 2023. 

![image4.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image4_7d53f9c83e.png)

**Puer by Lonely Bug:** Lonely Bug is an NFT collection launched by Liam Payne, musician and former member of One Direction. The Puer 1/1 gave the token holder the ability to dine at Resorts World Las Vegas with Liam Payne, Zedd, Gary Vaynerchuk, Sillygabe, along with other crypto leaders.

![image2.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image2_c6bf327579.png)

Keep in mind that these are just a few examples of what NFTs can offer. 

The possibilities for access tokens are virtually endless.

That said, not all NFTs will have access experiences and not all NFT projects will be able to deliver on their promises. So bear that in mind before buying a token.

Always do your own research and be cautious of fake accounts and false information. 

> Security reminder: please be cautious of any dodgy sites pretending to be another web3 project ❤️

### Community
An NFT project’s community and how its members interact with one another is a strong indicator of what the NFT project is all about. 

Some NFT communities may only be concerned with floor prices, while others may forge genuine friendships and connections with other members.

So pay attention to the community too. The connections you make along the way are just as, if not more important than, the perks that you get along with owning the NFT. 

What matters is how members are communicating with one another and how active they are in sharing their excitement about the values of the brand or collection. 

One of the best ways to get involved is by going directly to Discord and interacting with the community there. Discord is one of the most popular social media platforms for NFT communities to gather and get to know each other.

After joining, you will perhaps start to see why some people have developed an emotional attachment to the NFT they own.

### Intellectual Property (IP)

When buying an NFT, it is worth checking whether or not it comes with IP rights.

This is important because there might be restrictions on what can be done with the NFT.

You see, some people may want to use their NFT for commercial purposes, such as opening a restaurant with a theme relating to the NFT art.

Others may want to sell T-shirts that have the NFT designs on them. To do so, you must ensure that the NFT comes with full IP rights.

> 💡 Fun Fact: Did you know that if you own a WoW, you have full ownership over the art? 


Utility: What can you do with them?

Pretty much any digital file can be turned into an NFT.

A jpeg image, a TikTok video, a 3D model, music… even the deed of a house.

**Speaking of TikTok, did you know that TikTok collaborated with Immutable X (another NFT minting and trading platform) to launch a few NFTs in 2021? One was a TikTok of Bella Poarch lip-syncing ‘M to the B’.** 

![image1.png](https://wow-studio-foundation-cms-staging-public.s3.amazonaws.com/image1_fed910b949.png)

All it takes is for this digital file to be “minted” — a process where you pay a small fee to upload the token onto the blockchain. 

This then allows for the token to be transferred to anyone around the world.


What can be turned into an NFT?

You can buy and sell NFTs on an NFT marketplace. Just like marketplaces in real life, NFT marketplaces bring buyers and sellers together and enable them to transact with each other.

Some of the most popular NFT marketplaces are listed below:
- OpenSea
- Rarible
- LooksRare 
- Foundation
- Nifty Gateway
- SuperRare
- TokenTrove

If you’re wondering what makes some different from others, it basically depends on whether some are more niche. For example, Opensea is open for anyone to buy, sell, and create their own NFT, whereas SuperRare is a more refined curated marketplace to collect NFTs. Some only facilitate NFTs on a certain blockchain, whereas others support multiple blockchains.


Where do you buy and sell NFTs?

In the previous lessons, we’ve learned what NFTs are, what they can do, and what they can look like.

But what is the difference between NFTs and other types of tokens?

To recap, an NFT is a one-of-a-kind digital asset that can be represented by some sort of media (text, image, video, file, etc). It lives on the blockchain, serving as proof of ownership for the asset. Its value is determined by both subjective and objective characteristics

There are also fungible tokens. 

Unlike NFTs, fungible tokens are common digital assets that are not represented by any form of media. Like NFTs, they also live on the blockchain as a way to prove ownership. Their value is also derived from subjective and objective characteristics. 

In other words, fungible tokens are cryptocurrencies!

Cryptocurrencies are not unique:

1 Bitcoin is equal to another 1 Bitcoin.

Whereas NFTs are unique:

1 NFT is not equal to another, 1 NFT.

And that's that!

NFTs vs Other Types of Tokens

NFT.svg

NFTs 

What makes up web3? 

You can buy and sell NFTs on an NFT marketplace. Just like marketplaces in real life, NFT marketplaces bring buyers and sellers together and enable them to transact with each other.
Some of the most popular NFT marketplaces are listed below:
<ul>
<li><a class="glossary-term" data-tooltip-id="term-68">OpenSea</a></li>
<li>Rarible</li>
<li>LooksRare </li>
<li>Foundation</li>
<li>Nifty Gateway</li>
<li>SuperRare</li>
<li>TokenTrove</li>
</ul>
If you’re wondering what makes some different from others, it basically depends on whether some are more niche. For example, <a class="glossary-term" data-tooltip-id="term-68">Opensea</a> is open for anyone to buy, sell, and create their own NFT, whereas SuperRare is a more refined curated marketplace to collect NFTs. Some only facilitate NFTs on a certain blockchain, whereas others support multiple blockchains.

You can buy and sell NFTs on an NFT marketplace. Just like marketplaces in real life, NFT marketplaces bring buyers and sellers together and enable them to t...

Where do you buy and sell NFTs?

Thank you for the feedback! 💜

Crypto

Smart Contracts

Wallets

Where do you buy and sell NFTs?

Thank you for the feedback! 💜

More related chapters

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