Web3 – Let’s Talk About N-F-Ts
Let’s talk about non-fungible tokens or NFTs
First, a word on fungible.
- Fungible = Interchangeable. 🍎 ↔ 🍎
- Non-fungible = not interchangeable. 🍎 🍊 🙅♂️
- Token = any item that represents value.
Let’s start with a fungible tokens.
You can think about two $5 bills (or for our English friends, two fivers) as tokens. Both are functionally the same. Both can be used to buy a coffee or pay for lunch.
In web3, fungible tokens are Bitcoin, Etherium, and other forms of cryptocurrency.
What about the non-fungible type?
Well, Non-fungible tokens are a little different. They’re also valuable, but not interchangeable. Each is unique.
And in their most basic form, NFTs are text files that typically include: a name, a description, and a unique identifier or ID.
You’d probably never name a fiver.
Cool but… what is an NFT?
They can represent a singular item like a unique piece of artwork. Or they can be part of a collection of unique items, like an individual ticket to a concert, complete with a unique seat assignment. Here’s a few examples though to get our brains going:
- Passes – it can give us access to a private community or club.
- Tickets – we can use it to attend an event – online or IRL (in real life).
- Shares – it can represent our ownership stake in a business, piece of real estate, or an upcoming music album.
- Collectibles – It can be an original piece of art, music, or a collectible trading card.
- Games – or an in-game character or item that can be bought and sold between players.
What makes NFTs magical is that they can be programmed to do just about anything you can think of. They’re also incredibly easy to trade and sell.
That means they can be used to unlock cool experiences like a private party for anyone who attended a specific concert previously; combining collectable trading cards with a friend to unlock a new super rare card; or crowdfunding a new music album by selling a portion of future royalties as an NFT.
Because NFTs are so easy to trade and sell – imagine sending an NFT to a friend just like you might Venmo them for dinner – you can: sell your access (an NFT pass) to that upcoming private party; trade collectible cards with friends across the globe; or even sell your rights to those album royalties when you want to cash out.
The possibilities are endless.
Let’s connect a few dots
Zooming out a bit, NFTs work with a blockchain and a wallet.
The blockchain, a fancy public ledger, stores the NFT, tells us who owns it, when it was created, and even how much it was last sold for.
And a web3 wallet allows us to buy, sell, and hold NFTs. Two popular wallet options are MetaMask (a Chrome extension) and Rainbow (an iOS app). We’ll chat more about wallets though and how to use them in a future issue. 😅
For now though, you can think about these web3 wallets a little like the Wallet app on your iPhone. It lets you use your ID, credit cards, boarding passes, etc with a tap.
Before we go – some NFT lingo
Here’s a few words you’ll come across as you learn more about NFTs:
- Minting – when a new NFT is created it’s minted.
- Burning – when an NFT is destroyed it’s burned.
- Genesis – typically the first NFT of it’s kind or in a given series.
Here’s your takeaway:
Non-fungible tokens bring the concept of ownership to the internet. Items that are unique, that can be traded, sold, and used to unlock new novel experiences.