Introduction to NFTS

Introductory lecture to NFTS.

What are NFTs?

NFTs stand for Non-fungible Token which are tokens that can't be swapped for another.

For instance a 500 naira note in your pocket is the same note in mine, that's what fungibility means.

But a NFT is unique and can't be duplicated anywhere else in the world. That's what non-fungibility is.

And unique items have more value compared to non- unique ones. And that's where the concept of demand and supply comes in, If there's a lot of demand for a unique NFT collection, there'll be increase in it's cost because people value it, and there's no amount that's "too much" when it comes to the valuation of a unique item. That's why people would pay 150k+ for an Azul in a club and not for a Hennessy bottle because they term it more valuable than the Hennessy... 

And that's why we have people paying hundreds of thousands to millions of dollars for images JPEGs that you may see as "just images" and you may wonder why.... Their uniqueness is what makes them that expensive.

NFTs are just digital assets... But unlike basic Cryptocurrencies like BTC, ETH, they can't be swapped because they're unique, you know on Binance you can swap BTC/USDT, or SOL/BUSD.

The reason why you can do such is because these are fungible tokens.. You can swap them which means they are available everywhere. 1 SOL here in Nigeria is the same 1 SOL in UK, same with USA and anywhere else in the world, but NFTs are unique and you can't have duplicates of it because there can be only one of such NFT, and that NFT is registered on the Blockchain network... That registration is what makes it unique, even though anyone else can "right click > save" or screenshot the picture, they don't own the real NFT, what they have is just a mere JPEG because the signature lies with you and not them which means the legal ownership.

The signature is what you sell and transfer for money, and this is what makes the term "non-fungible token".

So say you buy a NFT built on the Ethereum Blockchain, the Nft would be registered in your name, it can be from a collection/project, but once you mint/buy it, the ownership gets transferred to you.. And when there's a lot of demand for the project, the floor price (least amount you can buy a NFT for) for the NFTs increase, and this is where basic economics come in play which is the concept of demand and supply.

What happens when we have demand for an asset? Or in this case a project? The price increases... It can be nonsense which is what a lot of people call it, but if there's high demand for that same "nonsense", it will sell at insane numbers... That's why we have people splurging millions of dollars for NFTs, they're not buying the picture, what they're buying mostly is the value attached to owning the NFT which includes the signature or proof of ownership and social status... Eg if you buy a crypto punk and announce it on Twitter, you'll get thousands of followers and requests from several hundreds at an insane rate, why's that? The crypto punk project has a high reputation due to how old it's been, the creator, and this affects the value it has and anyone who owns a crypto punk is perceived to be high value because only a few can afford to own a crypto punk... And this is also a reason why there's no such thing as "too expensive" when it comes to the valuation of something, valuation is in the eyes of the beholder... If the buyer sees the reward and potential of buying something as much more bountiful than the risks, he would definitely go for it no matter how expensive it may be.. This is why people buy NFTs, besides the art is also a main reason for people buying it, if your favorite or a reputable and popular artist creates an art, you can decide to buy it because:

- You like the artist. (This is why the project sells first).