What is NFT? A simple guide for beginners

Hello Japan DAO family☆

In this post, we will explore the concept of “NFT” that you’ve probably heard of but might not fully understand.

Even if you have never interacted with NFTs before, don’t worry. By reading this article, you’ll get a solid understanding of NFT basics!

And once you discover the allure of NFTs, be sure to check out the world of Japan DAO!

Read in conjunction with

What is JAPAN DAO? -Project Introduction-

What does NFT stand for?

Let’s start with the basics! NFT stands for “Non-Fungible Token.” In Japanese, it translates to “代替不可能なトークン” (irreplaceable token). It may sound complicated, but don’t worry, we’ll unravel it together.

A Brief History of NFTs

• 2014: The first NFT “Quantum” was created
• 2017: CryptoPunks emerged, showcasing the potential of NFT art
• CryptoKitties became a hit, increasing public awareness of NFTs
• 2021: The NFT market saw explosive growth
• Beeple’s artwork sold for approximately $69 million, making headlines
• Present: NFTs are being utilized in various fields like art, gaming, and music, with new possibilities being explored alongside technological advancements

Unique Digital Assets: The Key Feature of NFTs

Unique Digital Assets: The Key Feature of NFTs

The most significant feature of NFTs is that each one is “unique.” For example, a 10,000 yen note holds the same value no matter who possesses it. This is called “fungible.”

On the other hand, NFTs are unique and special. You can “own” irreplaceable digital items like a cherished photo or an exclusive artwork by your favorite artist.

The Technical Backbone of NFTs: The Power of Blockchain

NFTs are based on blockchain technology, which stores data in a decentralized manner, making it extremely difficult to tamper with.

This characteristic ensures the uniqueness and ownership of NFTs. While many NFTs are created on the Ethereum blockchain, they can also be made on other blockchains.

Examples of NFT Applications: Art, Gaming, and More…

NFTs are being used in various fields.

For example:

• Digital Art: Purchase digital works by famous artists as NFTs.
• Gaming: Turn in-game items and characters into NFTs, enabling true “ownership.”
• Music: Issue concert tickets as NFTs (TicketNFT), and offer fan-exclusive content access through NFTs.
• Collectibles: Digital trading cards and exclusive items.

Why Do NFTs Have Value?

The value of NFTs mainly comes from the following factors:

• Rarity: The value of being “unique” in the digital world
• Authentication: Proof of ownership through blockchain
• Community: The value of the community formed around NFTs
• Utility: Special rights and functions granted to NFT holders
• Brand: The brand value of artists and companies

Benefits of NFTs: Good for Both Sellers and Buyers!

NFTs offer benefits to both sellers and buyers.

For sellers:

• Directly determine the value of their work
• Potential to earn profits from secondary sales

For buyers:

• Guaranteed authenticity
• Become the true “owner” of digital assets

How to Buy NFTs: Easy for Beginners!

Buying NFTs is easier than you might think. Here are the basic steps:

1. Prepare a cryptocurrency wallet (MetaMask is recommended)
2. Purchase cryptocurrency (usually Ethereum is used)
3. Find the NFT you want on an NFT marketplace (like OpenSea)
4. Purchase it!

However, for first-timers, starting with a small amount is recommended.

Cautions: NFTs Have Pitfalls Too

While NFTs offer many possibilities, there are also cautions:

• Prices can be highly volatile
• Beware of scams and counterfeits
• Concerns about environmental impact

Understanding these risks is essential to enjoying and wisely engaging with NFTs.

Future Prospects of NFTs: Exploring New Possibilities

The world of NFTs is evolving daily. Future developments to look forward to include:

• Linking real-world assets with NFTs (e.g., digitizing property titles as NFTs)
• Expanding use in the metaverse
• Developing more environmentally friendly NFT creation methods
• New business models utilizing NFTs

Glossary of Key NFT Terms

• Mint: Creating and issuing a digital asset as an NFT on the blockchain
• Gas Fee: Transaction fee for conducting transactions on the blockchain
• Wallet: A digital wallet for storing cryptocurrency and NFTs
• PFP (Profile Picture): NFTs used as profile pictures on social media
• SBT (Soul Bound Token): NFTs that cannot be transferred or sold

Conclusion

NFTs are an innovative technology that introduces the concepts of “uniqueness” and “ownership” to the digital world. They are being utilized in various fields like art, music, and gaming, creating new possibilities.

While it may seem challenging at first, as you deepen your understanding step by step, you’ll surely discover new joys.

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