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What is an NFT? Part 2
What, you thought you were done?
GM. Welcome back to Decentra Daily, your Hitchhiker's Guide to The Metaverse.
Wait – did I use that opening line yesterday? Darn. Oh well, maybe it should be our official tagline?
Today we're returning to a core question: WTF is an NFT?
Last week, we covered the basic description, tech, and use cases for non-fungible tokens. Check out part 1 if you missed it. This time, let's look at the two most famous NFT collections.
Today's stories:
Famous NFTs
How to buy an NFT
Famous NFT collections
In part 1, we outlined three ways that NFTs are used to store value:
an NFT can represent ownership of valuable objects or data 📜
an NFT can grant its owner access to valuable things 🔑
an NFT can become a speculative, tradable asset 📈
In #1 the NFT acts as a digital deed, while in #2 the NFT is a ticket or key for accessing benefits.
In #3, on the other hand, the NFT itself is the focus of value.
These NFTs are designed with collectors and traders in mind – building out universes of characters, games, events, and rare collectible media that sells for big $$ on secondary markets.
It's this use case that helped NFTs reach the mainstream in 2021 – thanks to famous collections like Bored Apes and CryptoPunks.
Bored Ape Yacht Club
The 10,000 grunge-inspired simian slackers that make up the Bored Ape Yacht Club are arguably the best-known NFT collection right now:
The images of Apes you see on people's social media profiles and in hyper-cringe Jimmy Fallon segments were made with a generative algorithm and 170 different character traits. Each Ape has its own look and rarity.
But the images are only part of the story. Each Bored Ape is linked to an NFT on the Ethereum blockchain, which confirms proof of ownership and membership of the Bored Ape Yacht Club.
"A limited NFT collection where the token itself doubles as your membership to a swamp club for apes." – BAYC.
Thanks to the success of the project, being a member of the Yacht Club means you're in possession of a valuable asset.
The Bored Ape Yacht Club is a community more exclusive than many of America’s fanciest golf courses and marinas. You can chat with other members on Discord, attend in-person events, and get VIP treatment in other projects launched by Yuga labs – BYAC’s creators.
Plus, owning a Bored Ape NFT gives you license to use it in your own projects, from merch to movies:
Jenkins the Valet - one well-known Bored Ape community project is Jenkins the Valet, an ape with an expanded backstory, community-written novel, metaverse, and Twitter account.
Mutant apes - Yuga labs continued to provide utility (there’s that word from part 1) by handing out digital vials of "mutant serum" to every Ape holder that allowed them to mint new “mutant ape” NFTs, which they could hold or sell.
APEcoin - In 2022, BAYC launched its own cryptocurrency, APE coin. Again, all Ape holders were given free coins, which translated into a significant amount of US dollars.
Otherside - Yuga Labs' latest project is the Otherside, a gamified metaverse that connects the world of Bored Apes with other NFT collections the company has acquired, including...
CryptoPunks
Released in 2017 by Larva Labs, CryptoPunks are the original collectible NFTs – and inspiration for today's "ERC-721 standard" projects.
Like Bored Apes, there are 10,000 Punks, each made using a generative program that churns out 4x24, 8-bit-style pixel art heads with cyberpunkish traits.
Auction house Christie’s describes CryptoPunks as “a quirky art project that posed a serious and provocative question: Could a few lines of code translate to a feeling of meaningful ownership?”
The answer, evidently, is yes – many of the highest all-time NFT collectible sales are Punks.
Yuga Labs acquisition
In 2022, BAYC’s creators acquired Cryptopunks, making them the owners of arguably the two most iconic NFT collections.
Just as they did with Bored Apes, Yuga Labs is rolling out IP and licensing rights to holders so they can use their Punks in community-led projects.
How to buy an NFT
It's all well and good knowing what NFTs are, and how creators are harnessing the tech.
But how do you get your hands on one of these things?
First, you'll need a digital wallet to store your NFTs and cryptocurrency. Then, you'll want to browse one of the many NFT marketplaces.
Wallets
While it’s possible to buy NFTs with US dollars (fiat currency), most trades are made with crypto – specifically, ETH.
To trade and hold ETH and NFTs, you’ll need a digital wallet. These apps are similar to a physical wallet, except they store passkeys instead of banknotes.
Popular wallets:
While your crypto & NFTs live on the blockchain, your wallet protects the information needed to access and transfer them.
We're working on a full onboarding guide for anyone who wants to learn how to set up a wallet and buy crypto.
In the meantime, check out this simple explainer from Coinbase.
Once you have a wallet containing crypto, it’s easy to sign up with an NFT marketplace, connect your funds, and shop NFTs.
NFT marketplaces
If you come to an NFT project in the early days, you might join their “allowlist” and get the chance to be the first owner of a digital collectible.
The majority of people, however, will pick up their NFTs on a secondary marketplace.
There are tons of NFT marketplaces, some of which specialize in particular areas – such as art, collectibles, or games. Here are the biggest sites:
OpenSea
Towering over other marketplaces in daily trading volume, OpenSea is the world’s first and largest NFT marketplace.
What began in 2018 as a place to trade CryptoKittes has grown into a platform hosting over 80 million NFTs on Ethereum, Polygon, Klaytn, and Solana blockchains.
You can mint, list, and trade NFTs on OpenSea, all through a decentralized network, meaning there’s never a middleman holding your assets.
How to buy an NFT on OpenSea
Like marketplaces in other spaces, OpenSea contains both “buy now” lots and auction lots.
To participate, just connect your wallet to OpenSea (it’s easy!)
Rarible
Rarible is smaller than OpenSea but offers a few different features.
For example, you can purchase NFTs on Rarible with a credit card, and artists can set royalty fees as high as 50% (as opposed to OpenSea’s 10%).
Nifty Gateway
Nifty Gateway is a smaller marketplace currently owned by the Winklevoss twins. It’s known for its curated collections and sales of some of the most famous NFT art pieces, by artists such as Beeple and Pak.
If you include those made for specific projects and games, there are literally hundreds of NFT marketplaces out there.
So look around! – and always do your research before committing to any new product or service.
Until tomorrow! 🤝
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