What are NFTs?

[Ennui.]

I keep seeing things about NFTs and how bad they are, but I have been afraid to admit I don't actually understand what they are What's an NFT?

According to Wikipedia, it's some dark web cryptocurrency thing.

[eaty]

Not dark web.

Basically a NFT is a image that has gone through a process to make it one of a kind, that gets traded around for a lot of money. But it has to go through a lot of channels to become one, and works in similar ways to cryptocurrency. And the process to buying one is basically luck, because one will go for auction, you enter a queue and may or may not get a chance to buy one.

My husband has a coworker who is huge into cryptocurrency and now NFTs and actually bought one over the weekend. And my husband was reading me texts this morning of his coworker explaining it to him, and this is all I could remember. Cause it was very complicated.

So in short, it is a one of a kind image that people buy and resell to try and get more money.

[Storyteller.]

I'm not an expert on the subject, so anyone with more information is more than welcome to correct me.

Essentially, an NFT is a bit of data stored on a blockchain that's linked to a digital file (most commonly an image, but it can be video, audio, etc). What makes it non-fungible is that once that data is on the blockchain it can't be removed or modified and the token is specifically identifiable (as opposed to, say, bitcoins, which are all interchangeable with each other), which effectively makes it one of a kind. If you buy an NFT that's been minted (put on the blockchain), a record of that transaction is stored in a way that can be viewed but not altered, and from there you can sell or trade it. So you're kind of buying proof of ownership rather than the digital file itself, which in most cases can easily be copied (for example by right-clicking an image to save it).

There are minting and transaction fees, and most of the value of a token is speculative - you buy it now because you think it will be worth more in the future. This property predictably leads to a pretty high prevalence of scamming and is also the reason of a lot of people who are into NFTs are very vocal about it. The more people they can get involved, the more money they can potentially earn (often by banking on the fact that the people who get involved after them will actually lose money).

Validating these transactions also take a lot of computational power, which is why there are environmental concerns with both NFTs and cryptocurrency (which are intrinsically linked anyway). It's hard to calculate the carbon footprint exactly, but it's definitely substantial. The mining of cryptocurrency and minting of NFTs also leads to an increase in demand for devices able to perform these computations, which can drive up prices and contribute to issues such as the global chip shortage (which is affecting manufacturing and availability of a lot of technological devices).

Environmental issues aside, there's also the question of ownership. When you buy an NFT, all you get is proof that you bought it. That doesn't necessarily mean that the person who sold it to you was the original creator or even had the right to sell it to you, and it also doesn't confer copyright to you. There have been a lot of cases of people (including some who are deceased) having their artwork stolen and minted without their permission, and because of the way the whole process works it can be very difficult to pursue any legal action once that occurs - or to prevent it from happening in the first place.

There are other issues with the industry, for example privacy and security, but this should hopefully be enough of an introduction into what NFTs are and why you've been hearing that they're bad. Let me know if there's anything you didn't understand/I didn't explain properly, otherwise I hope this was at least mildly helpful!

[Astro04]

An NFT is an acronym of Not Fungible Tokens.
I agree with wingless, that's exactly what it is. I think these informations are pretty correct and exhaustive!

[rachb]

Thank you for these information. I once tried a game called PVZ, my friend said it was an NFT game. I spent over $130 and didn't gain anything. I just don't understand it and have no time to study it

[Doodle.]

Here’s a good YouTube video I watched a few days ago

https://youtu.be/IZaTd0hDtkI