WHAT ARE NFTs?
WHAT ARE NFTs?
An NFT is a non-fungible token is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.
Well, that’s what Wikipedia said Let me break it down;
An NFT is a Non Fungible token. First what the hell is Non Fungible? assets that are not interchangeable.
Now what the hell is a token? a thing serving as a visible or tangible representation of a fact, quality, feeling, etc. in this case on the Blockchain. So an NFT is an asset that cannot be interchanged put(minted) on the Blockchain.
WHY THE HELL ARE THEY VALUABLE?
ONE WORD: UNIQUE . NFTs are UNIQUE, a one of a kind, No one else has that particular NFT.
NFTs play on human psychology “ we all value what we can’t get/ don’t have “ You can’t have a beeple EVERYDAYS cause there are no two of it so it’s Valuable (UNIQUE) .
Another spectrum is the Underlying technology, SMART CONTRACTS , in as much as we are still in the very early stages. The future are Smart contracts which will come in as NFTs.
SMART CONTRACTS ?
A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a public database and cannot be changed. The transactions that happen in a smart contract are processed by the blockchain, which means they can be sent automatically without a third party.
That is where we strike gold, With smart contracts Home buying will become less expensive, Faster, Hassle free and Safer.
A lot of “contracts” that used to require middle Men will be done on the Blockchain with Smart contracts.
ARE NFTs A GOOD INVESTMENT?
I won’t answer this directly, Why??? There’s no right or wrong answer in the spectrum. On one hand they could be, if and only if you buy one with Great intrinsic value. E.g people who bought Beeples art back in 2018/19 must have sold it for double the price, after his EVERYDAYS Sale. Also the Early owners of crypto Punks are probably millionaires after recent spike in demand for Crypto Punks as they are the first ever NFTs.
ON THE OTHER HAND, buying just any NFT (the first you lay your eyes on) might as well be a bad investment if it doesn’t provide a greater intrinsic value.
ACCORDING TO FORBES: some believe this “investment” is mostly being driven by the greater fool theory — a theory that says you can make money on anything if you find a greater fool to pay more than you did.
ARE NFTs Bad for the environment?
According to the Digiconomist website, a single Ethereum transaction consumes more than 70.32 kWh, enough to power 1 U.S. household for 2.5 days. This is equivalent to a carbon footprint of around 34 Kg of carbon dioxide (CO2).
THATS YOUR ANSWER :)
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