NFTs for Dummies (what are NFTs and why are they famous)

NFTs for Dummies (what are NFTs and why are they famous)

Last year, a collector sold an NFT for $11 Million after purchasing it for only $1,600 four years prior. Recently, another collector tried to sell an NFT that they had bought for a whopping $2 Million dollars. How much was the highest bidder willing to pay? $280.

Why are some JPEGs worth more than an island? And why do their values fluctuate so rapidly?

To understand this phenomenon, let's first understand what NFTs really are.

What is an NFT

A Non-Fungible Token (NFT) is a digital token that represents digital files like images, videos, and music (and many more).

NFTs listed on the NFT Marketplace, Rarible

A non-fungible item cannot be substituted with anything else. Consider 2 different 1-dollar bills. The value of one dollar bill is the same as the value of another dollar bill, which means that 2 different one-dollar bills are fungible. Now, think about the original painting of the Mona Lisa and other versions of Mona Lisa artworks. Although they look the same, the value of the original Mona Lisa painting cannot be substituted by its knock offs, which makes it non-fungible.

Similarly, an NFT image is completely non-substitutable by another NFT image, even if the images look the same.

The exact same image is sold for different prices because they are different NFTs - PAK

Why is it that even though the NFTs above look the same, they are valued at completely different prices?

When you buy an NFT, what you are really buying is a piece of data. That piece of data then points to an image or music or video on a server, which represents the NFT data. The piece of data for each image above is different. Every existing NFT has a unique ID that no other NFT has, just like our thumbprints.

What users are really buying is the data that makes up an NFT - Wipo

Some buyers mistake owning an NFT image as owning the image itself. But really, what they own is the data underlying that image. Until you sell that data, you own the NFT forever.

Different uses and types of NFTs

Critics of NFTs argue that NFTs are only hyped noise because they have no use for the buyer, which is why they will never be adopted widely. But, as NFTs continue to develop, projects have come up with many ways of making NFTs useful in gaming, job hunting, crowdfunding, and even supply chain management.

Today, many investors are entering the NFT space because of how applicable NFTs are in different situations for different demographics.

NFT investors are increasingly valuing NFT utility 

NFTs are also more versatile than most people perceive them to be. They can take the form of images, gifs, videos, music, SVG files, texts, and even HTML pages. This means that many types of creators can leverage NFTs to build and engage their audience.

Comedians can use video NFTs to build a paying audience - NIFTY Comedians

Why NFTs became famous (a brief history)

NFTs are all the rage today because they do 2 specific things well:

  • Monetize digital goods, which are being consumed rapidly
  • Create scarcity and capture demand of digital goods
  1. Rising consumption of digital goods & their monetization with NFTs

The digital economy has grown into a multi-trillion dollar market because consumers have a voracious appetite for digital goods.

Growth of the digital economy from 1997 to 2017 - BEA

From books to music to games, we are spending a lot of our money on virtual things. E-books and audio books readers are quickly catching up to the number of physical book readers.

With NFTs, many creators have a better way to monetize their product.

For instance, the royalties from books are barely anything through traditional publishing. When someone buys a book and then re-sells that book later on, the writer makes nothing from the secondary sales. But the royalties from NFTs always go back to the creator, no matter how many rounds of sales their product has gone through. NFT royalties are a huge incentive for creators to shift their creation to the blockchain.

2. Scarcity & Demand of NFTs

Another problem of digital goods today is their lack of scarcity. Historically, JPEGs and memes have not had a monetary value because anyone can own the same image with a simple right-button click.

With NFTs, each image is assigned a unique ID that can be owned. When the creator has control over the ownership of their good, they can transfer its value exclusively to a buyer.

But only having scarcity of a digital good is not enough. There must be people who want to own the good. Anyone can upload random images and put them up for sale. But, people will only buy them when they see value in it.

The first notable NFT demand can be pointed to the game, Cryptokitties. Players buy, trade and breed cats to create desirable traits for their cats. The collection of rare kitties became so fun that many users started valuing their kitties very highly.

Cryptokitties are valued for their traits

How to get started with investing in NFTs

  1. Set up your wallet
  • Download Steakwallet to connect to an NFT marketplace
  • Buy the token of your choice
  • Connect to an NFT marketplace using your Steakwallet

Steakwallet is a Web 3 wallet that supports multiple chains. Users can connect to NFT marketplaces for 14+ networks including Ethereum, Solana, Near, Cosmos, and many more! Download Steakwallet today to connect your wallet to a marketplace.

Bonus: Once you purchase your NFT, you can also display it on your home screen and show it off easily on mobile!

Show off your slick NFT on the Steakwallet NFT display

2. Pick your NFT marketplace

Our Top 4 picks of NFT marketplaces

  1. OpenSea: The largest NFT marketplace
  2. Rarible: Peer-to-peer marketplace for rare NFTs and collectibles
  3. tofuNFT: Marketplace focused on GameFi and collectibles
  4. NFTKEY: Non-custodial NFT marketplace dedicated to decentralization

Learn more about each of the marketplace above.

3. Choose your favorite NFT projects

The NFT space is filled with funky new innovations. How do you start finding the projects that you can believe in? You can start by choosing the category of NFTs you want to focus on.

As NFTs continue to develop, their use cases are becoming more varied. Learn about different kinds of projects to discover NFTs that you feel more connected with.

Here are the top 3 categories of projects that are the hottest right now:

  • PFP NFTs

PFP NFTs are used as profile pictures on social media profiles like Twitter. PFP collections tend to display a "character" that buyers can display on their profile pictures. PFP projects collectively created the most NFT hype in 2021, and they continue to be the most talked about NFTs today.

PFP projects often provide membership access, that help to create a community around the JPEG owners. For example, the Bored Ape Yacht Club (BAYC) holders gain members-only benefits like exclusive access to the BAYC discord channel and access to additional NFT collectibles like the Bored Ape Kennel Club dogs, which are usually sent to BAYC holders for free.

BAYC perks

The top PFP projects are also backed by the biggest names and influencers in crypto. They are the OG category of NFT projects and carry the ethos of community building at their core.

Pharrell Williams is the new Chief Brand Officer of the PFP collection, Doodles - CryptoTimes

Hot PFP NFT collections:

  1. BAYC
  2. Cryptopunks
  3. Doodles
  4. TinyDinos
  5. MFers
  6. Azuki
  • Game NFTs

In-game tokens are not a new concept. But with NFTs, in-game tokens become a lot more valuable because they benefit from the perks of plugging into Decentralized Finance.

Blockchain-based games provide NFTs for:

  • Game avatars
  • Game rewards like jewels and coins
  • Avatar accessories like weapons and gears
Avatars with accessories and weapons NFT - Tales of Elatora

Hot Game NFTs:

  1. Crypto Raiders
  2. Tales of Elatora
  3. DeFi Kingdom
  4. Crabada
  5. Sunflower Land
  • Music NFTs

What they are. What they do. Why they're hot.

Low royalties are an age-old problem in the music industry. Music NFTs are revolutionary for musical artists because they don't have to rely on centralized middle-men, who take the majority of the profit cuts.

Music NFTs for sale - ZORA

While the music NFT space is still developing, there are already a range of platforms you can explore to support music artists.

Hot music-related NFT platforms:

  1. OneOf
  2. Zora
  3. Catalog
  4. Sound
  5. Mint Songs

Learn more about each of the platforms above.

Buy and Display your NFT with Steakwallet

With so many innovations happening in the NFT space, its rules are ever-changing. Delve into NFTs today by starting with the easiest-to-use wallet out there, which integrates seamlessly with all NFT marketplaces that support Wallet Connect!


More on Steakwallet

Steakwallet is a next generation multi-chain self-custodial Web3 wallet on mobile. Our goal is to give users one place to manage all their assets across chains and make engaging with Web3 as easy as never before. To achieve this, Steakwallet brings critical functionality natively into the app where we abstract away backend complexity and add market leading user experience. This includes Steakwallet’s signature 3-tap staking flows, which make participating in securing blockchain networks and earning yield as simple as ordering an Uber or a pizza. With our Explore Screen, Steakwallet allows you to find all the right dApps on any chain. With one simple tap via WalletConnect, you can now easily bridge, swap, and ape into any yield opportunity right from your phone. And with multi-chain NFT support, you can collect all of your favorite NFTs in one place and even set them as your background for to easily flex your collection. Now this is what a Web 3 wallet should look like!

Core Steakwallet Features

  • Your keys = your crypto
  • Multi-chain by default
  • Native staking flows
  • Discover the best of each chain on our Explore Screen
  • Best rates
  • Mobile-first

Come hang – join the Steakwallet community on Discord and follow Steakwallet on Twitter for all updates!

THIS WEB PAGE (INCLUDING THE ARTICLE CONTAINED HEREIN), IS FOR INFORMATIONAL PURPOSES ONLY. PLEASE DO NOT CONSTRUE ANY SUCH INFORMATION OR OTHER MATERIAL CONTAINED ON THIS WEB PAGE AS LEGAL, TAX, INVESTMENT, FINANCIAL, OR OTHER ADVICE. THIS WEB PAGE AND THE INFORMATION CONTAINED HEREIN IS NOT A RECOMMENDATION OR ENDORSEMENT OF ANY DIGITAL ASSET, PROTOCOL, NETWORK, OR PROJECT. HOWEVER, STEAKWALLET (INCLUDING ITS AFFILIATES AND/OR EMPLOYEES) MAY HAVE, OR MAY IN THE FUTURE HAVE, A SIGNIFICANT FINANCIAL INTEREST IN, AND MAY RECEIVE COMPENSATION FOR SERVICES RELATED TO, ONE OR MORE OF THE DIGITAL ASSETS, PROTOCOLS, NETWORKS, ENTITIES, PROJECTS, AND/OR VENTURES DISCUSSED HEREIN.
THE RISK OF LOSS IN CRYPTOCURRENCY, INCLUDING STAKING, CAN BE SUBSTANTIAL AND NOTHING HEREIN IS INTENDED TO BE A GUARANTEE AGAINST THE POSSIBILITY OF LOSS. THIS WEB PAGE AND THE CONTENT CONTAINED HEREIN ARE BASED ON INFORMATION WHICH IS BELIEVED TO BE RELIABLE AND HAS BEEN OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE, BUT STEAKWALLET MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE FAIRNESS, ACCURACY, ADEQUACY, REASONABLENESS, OR COMPLETENESS OF SUCH INFORMATION. STEAKWALLET CANNOT BE RESPONSIBLE, IN ANY WAY WHATSOEVER, FOR YOUR USE OF THE INFORMATION CONTAINED IN OR LINKED FROM THIS WEB PAGE. DO NOT RELY UPON ANY INFORMATION FOUND ON BLOG. STEAKWALLET.FI OR SUPPORT.STEAKWALLET.FI WITHOUT INDEPENDENT VERIFICATION.