TS1 | What Are NFTs And How Are They Used?

NFTs! Blockchain! Millions of moolah! I’ve heard all these words but what do they mean? Also, while you’re at it, could you help me understand how can I get started? Am I too late? Can I create my own NFT? If you have similar thoughts when you hear about NFTs and the crypto world, this episode is for you!

Discussion Topics: What are NFTs and How Are They Used?

• What is Blockchain?
• What is a Non-fungible token (NFT)?
• Valuing an NFT
• Checking the authenticity of an NFT artwork
• Innovative forms to create value for an NFT
• What is Staking?
• NFTs as deeds

Transcript: What are NFTs and How Are They Used?

Hi everybody, welcome to the pilot episode of The Token Singaporean, my name is Vnstr. And in our first episode, I’m just going to give you an overview of what I know about NFTs. And hopefully, by the end of this episode, I can kick-start your understanding of this technology that everyone’s been talking about.

Thank you for being here and listening to this first episode. It is my first time recording as well, pretty nervous, but I’m excited to share what I know. So before I begin, perhaps I’ll share a little bit more about myself before I delve into the topic properly. So in the Web 3 space, I’m known as Vnstr. And you can find me on Twitter at Vnstr_eth.

So actually, I have been in the crypto space for quite a while. I first got to know about crypto in 2017, during the bull run. So if any of you guys recall, during that period, it was I think the first time they really covered it in mainstream news about crypto and about you know, so many people becoming millionaires overnight, prices rising exponentially in a very short period of time. So naturally, that caught my attention. So that was when I started delving into crypto. I had a friend also who was very interested.

So I would say that he really propelled me to want to read up more on crypto as well. So we were both just exchanging the information that we knew. And it was pretty interesting, but we didn’t really get into the space proper until the crypto winter, because during then I was fresh out of uni, I was fresh and broke. I didn’t have much money to set aside anyway. But yeah, so during winter, when prices were really low, I took out some money here and there whenever I could, and I just dollar cost average into some coins, which I really liked and believed in. And yeah, that was how I started.

So fast forward to 2021, around the end of September, that was when I got acquainted with NFTs and that was when I got into this space. As to how I got to know about NFTs, I think that that’s another story for another day. Hopefully one of these days, I can get the person who brought me into NFT to join us for this podcast, because I think we have lots of stories to tell.

But yes, when I first started, it was very overwhelming at first. So to me, I felt that if I really wanted to understand this space in a short amount of time, I would have to dive straight in. So I really committed a lot of time, and basically a lot of time to get into the different communities to read up on the different projects available. So it’s been a couple of months now.

You know, it seems like a short time, but because things evolve so fast in the NFT space there is a saying in the NFT space that if you are one month into NFTs, you can be considered an OG because if you actually stay in this space every single day, and spend a lot of time in there, you really get to go to a lot of things in there and you get to see the entire space evolve, going through multiple evolutions of different trends, and whatnot.

Yeah, so even though it’s a short time, it feels like forever, to be honest. So at this point in time, I would say that I’m pretty heavily invested in NFTs, I’ve been a moderator, I’ve been a Community Manager, and I’ve also worked together with founders, to help them with their projects here and there. I personally invest, and I also flip some projects. So I think I’ve tried my hands at all the different stuff that’s available. I’m only short of creating my own project, which I don’t intend to do so anytime soon.

But I think right now, my aim of setting up this podcast is really to just try to share the information that I know, and hopefully get more people who do not know anything about NFTs yet to get interested and just you know, come on board and join me on this journey because I really believe that this technology is here to stay.

So without further ado, let’s delve into what exactly NFTs are about. So we’ll start with the definition. So NFT is an acronym right, what exactly does it stand for? So NFTs actually stands for non-fungible token and what is a non-fungible token? Basically, it is a token that exists on a blockchain. Okay before I continue sidetrack, what is a blockchain?

A blockchain is basically a distributed public ledger that records transactions. So all the buying and selling this and that that you do will be recorded down in the ledger and it is accessible by everyone. So I think currently, the most widely used blockchain for NFTs would be the Ethereum blockchain, of course.

Other blockchains also support NFT’s, for example, Tassels, Solana, etc., but probably not so widely adopted yet at this point in time. So down the road, I think most of the projects that we talked about, are probably going to be projects that exist in the Ethereum blockchain.

And next thing to understand what it means to be non-fungible. So what is a non-fungible token? So when we say something is non-fungible, it basically means that each of the token has a digital signature, to make each of them unique. So by being unique, it means that they cannot be exchanged for or equal to another. So what does all this mean?

Let me give you an example for this. So example, when we look at physical money, let’s say we look at a $1 coin, when I have a $1 coin, and someone else also has a $1 coin, I can easily exchange these $1 coins, and they will be completely the same, completely equal in terms of value, there is nothing that sets them apart, right? So this is actually what it means to be fungible, that you can just exchange them and they will be of equal value. They’re not unique, they’re exactly the same.

So what does it mean to be non-fungible then? Let’s look at one example. So for example, if an artist drew a collection of different art to maintain as NFT. So basically, each piece of art becomes an NFT. Even though all these art pieces come from the same artist, they may not be exactly the same, because the artwork is different. That is one thing.

Secondly, people may value each art differently. So even though it’s by the same artist, perhaps this particular artwork has some special features that people really like, so it can go for a higher value compared to another piece of art. So this is what it means that every single piece is unique, even though it’s under the same collection, and it cannot be exchanged, just like that for equal value.

So like the example I mentioned, the most commonly known form of NFT is probably digital art. But it can also come in other forms like for example, GIFs, videos, collectibles, virtual avatars for the metaverse or for games, designer items, even music, etc. and there are just so many possibilities.

So there is a very famous example of how Jaypak became just like, you know, super valuable. You can probably Google it and it will be one of the first stories that you will encounter. It is this story about Jack Dorsey’s tweet. For anyone who doesn’t know, Jack Dorsey is the founder of Twitter. So what he did was that he printed screen his first ever tweet on Twitter, and he mentored it into an NFT, basically, he made it into an NFT. And that particular tweet, I mean, that particular NFT was eventually sold for about $2.9 million.

Yes. So with this, I move on to the next segment to discuss what exactly gives NFT its value. So at the very basic level, you can understand NFTs as being like collectibles. So value is determined by scarcity, as well as its demand. However, the most valuable, or rather, cutting-edge difference between buying an NFT versus buying a regular collector’s item is that this blockchain technology allows us to authenticate ownership.

So this is very important and it really makes a lot of difference because currently, if you look at the luxury market, you look at the collectibles market, you look at the physical art market, and so on and so forth I think one of the biggest challenges that they encounter, especially for people who are not professional in those different areas, would be to actually determine whether a particular piece is actually authentic. So this actually helps to solve that problem.

So in this case, each NFTs data on the blockchain will clearly reflect the owner of an NFT at any one point in time. So it’s easy for you to tell number one, whether this particular piece is the authentic original piece. Number two, whether the owner is the real owner of this original piece. So there’s this one point, right there I realised a lot of haters of NFTs like to talk about that is there, Oh, why should I spend $1,000 to buy a piece of art?

Or rather, why should I spend $1,000 to buy this picture, when I can just copy and paste it and I also own it, they think they’re very smart to do something like that. But the fact of the matter is that people can copy and paste and own the same JPEG. But on the blockchain, you can clearly identify the actual owner of the NFT. And only the original NFT will have value.

So the rest of you, I mean, the rest of the people who copy and paste, yes, they can own it with open and close inverted commas. But all those pictures were of no value. Additionally, creators can also possibly store additional information in the blockchain, for example, artists can include their original signature in an NFT metadata and all this data can create even more value for the NFT.

So just now, as I mentioned, all the buying and selling and all the transactions will be recorded on blockchain. And it can be viewed by everyone. So example, you want to buy this piece of NFT. Okay, other than all this stuff that I’ve mentioned, you can actually also easily check who used to own the piece of art.

So for example, if this particular piece of art was once owned by Obama, or like Dwayne ‘The Rock’ Johnson, that in itself can also add to the value of this particular piece of art, you see. So the possibilities are pretty endless if you ask me. And actually, I think even today, creators are still constantly innovating and finding new creative ways to utilise the NFT technology in order to create even more value for NFT owners other than the kind of profits that they can get from buying and selling the NFT itself.

So, for example, maybe a particular NFT project decided that each of the NFTs, that they are going to sell, is going to act like an exclusive club membership. So in this case, if you own the particular NFT, other than the value itself, you’ll also get special rights depending on the nature of the club. So for example, if it’s like a networking club, maybe you get access to people whom you otherwise wouldn’t be able to get access to, in your day-to-day life.

Or maybe it could be an alpha club, I mean, a club where you can exchange information and learn the trade together, or things like that, you know, there can be many, many possibilities of clubs like that. It can also come in the form of play-to-earn games; it can also come in the form of DAO. Just to let you know, DAO means Decentralised Autonomous Organisation as to what exactly it does, we’ll talk about it maybe further down the road.

You can also possibly earn passive income through staking. Staking means to lock your NFT in a vault, so you don’t list it on the market to sell. And in exchange, they will give you tokens, you can earn tokens on a daily basis, or after a period of time, and these tokens can be exchanged for Ethereum, and then exchanged to be used in the real world.

And I think one of the very interesting ways that people are trying to utilise NFTs is to let NFTs serve as deeds or certificates of physical assets. So this is very interesting, because, for example, maybe you own several properties, and maybe supercars in another country. And right now you are somewhere far away, and you need liquid.

So you want to mortgage this stuff, but you know, because it’s so far away, it is difficult for you to prove that you own this stuff. And you know, with physical contracts, it could easily be forged, or whatever. So what happens is with NFT technology, right? Once again, you can easily prove your ownership of the item. And yeah, it makes everything much easier in terms of transactions and like things like that in the future.

And a disclaimer, that whatever I’ve mentioned, is not all that’s available. Of course, I think the potential is limitless and I probably have not seen a couple of stuff that maybe they are already in the market. And you know, creators are constantly thinking about new ideas to utilise this in innovative ways. So I’m pretty sure in one or two weeks’ time, we’re gonna see something new that’s very interesting the way people make use of this new technology.

But regardless, just with all these possible utilities, this is what makes me very confident that this technology is probably here to stay. And it will definitely benefit everyone to start to get to know about what exactly NFTs can do.

All right, and with that, we’ve come to the end of our pilot episode of The Token Singaporean. Thank you so much for joining me here today. And I really hope that my sharing has allowed you to learn a thing or two, about this space about NFTs, and hopefully get you more interested to want to delve deeper into this space. At this point in time, I would just like to emphasise that everything that I say in this podcast is not financial advice.

So, personally, I’m also constantly learning in this space. I mean, I’ve been here for a while, but I’m still learning, There’s still lots that I don’t know, perhaps a couple of weeks down the road, some of the information might already become obsolete, some stuff might need to get updated. And I plan to do that along the way as we go along. But yes, because of that, do take this podcast more as a learning session, a sharing session, rather than like a money-making Bible or something because it’s not that.

Okay, so once again, thank you so much for being here with me. If you’ve enjoyed the podcast, I would really appreciate it if you could just drop me a review. If you have any questions, feedback, or suggestions, feel free to write to us and we will try to read them all and answer your questions. And thank you so much. So I will see you again in the next episode.