What is an NFT and why should I buy one?

Chances are you’ve heard the word ‘NFT’ on a birthday or from the coffee machine at work. Last year there was a hype around these digital objects. Images, videos, songs and even the first tweet were sold for outrageous sums.

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

Everything you want to know about NFTs

In this article, we take a look at 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 start making it yourself. And furthermore, that buying and selling NFTs is not without its dangers.

What is an NFT?

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

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

Why are (some) so valuable?

Even if you have that certificate of ownership, it doesn’t mean that others can no longer find the image on the Internet. Many people find this strange about the NFT trend: why are millions deposited in images that you can also just download from the Internet?

“The answer to that is twofold,” says Duursma. “NFTs are worth something because we have all determined that they are worth something. Value is actually a social construction. A Picasso is really just 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 some ink.”

The NFT can also sometimes have additional features that make it more valuable. “Sometimes an NFT is more than you initially think,” he explains. “As a manufacturer, 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, it creates an interesting form of membership or smart customer loyalty.”

They often laugh at NFTs. “But actually what we do in the physical world is now translating to the digital world,” he continues. “Spend more on a Patagonia sweater than on an H&M sweater. You pay for the brand and thus show that you belong to a group”.

According to the tech expert, that’s not the only reason NFTs are so booming they are today. It is really just an expression of our human motivations. Not only belonging, 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, now we know why NFTs sometimes generate thousands or even millions of euros. How can you get a piece of this yourself? There are two ways you can make money with NFTs: by creating and selling an NFT yourself, or by buying an existing NFT in the hope that you can resell it later for more money.

According to Duursma, making NFTs is mostly interesting for creative minds, whether you’re an artist or a vlogger. The average person will look to the second way: buying existing NFTs in hopes of reselling them for more money.

With an emphasis on ‘hope’, because while there are many success stories to be found on the internet, there are many NFTs that produce absolutely nothing. In fact, the largest marketplace, OpenSea, is even taking action because more than 80 percent of NFTs created with its free NFT tool turn out to be fraud, fake art, or plagiarism.

How do you know which ones will make money and which ones won’t? Doing good research and spending a lot of time on it. “In OpenSea, for example, you see all kinds of statistics,” says Duursma. “Which NFTs are rising in price, which are falling, and how much is trading. You can also keep an eye on what’s being talked about a lot on Twitter and Discord. Buy the rumour, sell the newsthey also call it that. Buy when there are rumors and sell when NFTs are in the news.”

gambling in the casino

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

A while back I was interested in the Bored Ape Yacht Club NFTs, monkey cartoons. “At the time you paid about 2,500 euros for a copy,” he says. “I doubted it and didn’t buy one. Now they are sold by the tons and millions.” Last week Justin Bieber bought a Bored Ape NFT for more than a million euros.

For him, the decisive reason to buy an NFT is not how much money he thinks he can make with it, but simply whether he likes it or because it appeals to him. He has now collected ten NFTs from the Sushiverse collection. “They didn’t win me a dime, but I like to watch.”

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

Do you want to buy an NFT? So that process is quite difficult, especially if you haven’t eaten crypto yet. Duursma wrote a manual that takes you step by step and explains how to recognize a valuable NFT.

The NFT Million Hype: 7 Weird and Expensive Non-Fungible Tokens

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NFTs: what are they and why should you buy one? “The NFT market often resembles a casino”

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