What is an NFT and why should you buy one?

Probably you heard the word ‘NFT’ on a birthday or at the coffee machine at work now. Last year, there was a hype surrounding these digital objects. Photos, videos, songs and even the first tweet were sold for outrageous sums.

But what exactly are these NFTs? And how can you even make money on it yourself?

Everything you want to know about NFTs

In this article, we discuss everything you want (and need) to know about NFTs. From why someone would pay $ 69.3 million for a JPG collage to how you could possibly get started with it yourself. And besides, buying and selling NFTs is not without dangers.

What is an NFT?

Technical expert Jarno Duursma explains that a non-fungible token (NFT) is a digital ownership certificate. “You can link this certificate to a digital object, such as an image, and then register it in a public database, blockchain,” he explains. “You then store the NFT in your own digital wallet, of which only you have the digital key.”

According to him, you can compare the principle with a glass safe, which contains your proof of ownership. “Everyone can see through the glass (the blockchain) that you own it,” he says. “You’re also the only one with the key, and you can resell it.”

Why are (some) so valuable?

Even if you have that certificate of ownership, it does not mean that others can not find the picture on the Internet anymore. Many people find the NFT trend strange: why are millions deposited for images that you can also simply download from the Internet?

“The answer to that is twofold,” says Duursma. “NFTs are worth something because we’re all determined it’s worth something. Value is actually a social construction. A Picasso actually only consists of paint and canvas, but we’ve all decided it’s worth a fortune. A ten-dollar bill is also just a piece of paper and a little ink. “

NFT can sometimes also have extra features that make it more valuable. “Sometimes an NFT is more than you first think,” he explains. As a maker, you can also program an NFT in such a way that your NFT gives the buyer access to a special portal on your website, or a special video channel. In this way, you create an interesting form of membership or smart customer loyalty. ”

NFTs are often laughed at. “But in fact, what we do in the physical world is now translated into the digital world,” he continues. “You spend more on a Patagonia sweater than on an H&M sweater. You pay for the brand and thus to show that you belong to a group. ”

According to the technical expert, this is not the only reason why NFTs are boomer is today. It’s really just an expression of our human motivation. Not only affiliation but also Fear of Missing Out (FOMO), greed, materialism and status play a role. “But also our identity: we buy something because we like it or because something appeals to us.”

Buy an NFT

Well, we now know why NFTs sometimes give thousands or even millions of euros. How can you even get a piece of this? There are two ways you can make money with NFTs: by setting up and selling an NFT yourself, or by buying an existing NFT with the hope that you can later sell it for more money.

According to Duursma, making NFTs is primarily interesting for the creative minds, whether you are an artist or a vlogger. The average person will look the other way: buying existing NFTs in hopes of selling them back for more money.

With an emphasis on ‘hope’, because even though there are lots of success stories on the internet, there are just as many NFTs that provide absolutely nothing. In fact, the largest marketplace OpenSea even takes action because more than 80 percent of NFTs created with their free NFT tool turn out to be fraud, fake art or plagiarism.

How do you know which ones are going to make money and which ones are not? By doing good research and investing a lot of time in it. “At OpenSea, for example, you see world statistics,” says Duursma. “Which NFTs are rising in price, which are falling, and how much is being traded. You can also keep an eye on what is being talked about a lot on Twitter and Discord. Buy the rumor, sell the newsthey call it that too. Buy when there are rumors and sell when NFTs are in the news. “

Play in the casino

Duursma emphasizes that buying and selling NFTs cannot be compared to investing, even though it is mentioned so often. According to him, it’s more gambling, and he should know that; He himself also regularly buys an NFT. “Some have become quite successful, others not at all,” he says. “It really is a casino.”

For a while back, he was interested in Bored Ape Yacht Club NFTs, cartoons of monkeys. “Back then, you paid around 2,500 euros for a copy,” he says. “I doubted it and did not buy one. Now they are sold for tons and millions.” Last week, Justin Bieber bought a Bored Ape NFT for more than a million euros.

For him, the decisive reason for buying an NFT is not how much money he thinks he can make on it, but simply whether he likes it or because it appeals to him. He has now collected ten NFTs from the Sushiverse collection. “They did not earn me a penny, but I just like to see.”

According to Duursma, NFTs were originally intended as collectibles. “It started as digital artbut then people smoked money. ”

Do you want to buy an NFT? Then that process is quite difficult, especially if you have not yet eaten crypto. Duursma wrote a manual in which he takes you step by step and explains how to recognize a valuable NFT.

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NFTs: what are they and why should you buy one? ‘NFT market often looks like a casino’

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