Skip to main content

NFT(Non-Fungible-Token)101 | A Complete Explanation for begineers 2022.


A few weeks ago someone paid "1.3Million$" for a clip art image of a rock. Now, while most of us were dismissing this as further proof that NFT(Non Fungible Token) collectibles were worthless and in a bubble, I wanted to better understand these valuations. After all, we can't all become like the no coins we rall against by dismissing everything we don't understand. So I went down the NFT collectible rabbit hole and boy, is it a magical world. So in the article today, I'm going to be taking a deep dive into , NFT collectables explaining exactly what they are and how they're valued and we will be  taking a look at some of the most popular collections as well as those that have the most potential? I may also have a tip or two when it comes to picking up these rare NFTS, so that's something you don't want to miss.  I'm no financial advisor.Nothing in this article is financial advice. This is   only for your education. See for those new here ,my name is "MrCrypt", and here on cryptolibrarynow, everything from news to reviews and coin overviews, we cover it right here. Alright, it's time to start. 

What is NFT?

Now. I assume that most of you will know exactly what an NFT is at this stage. If you don't, here is the quick TLDR an NFT is a non-fungible-token, a unique digital asset that is issued on a blockchain and holds the following characteristics. It's permanent, it cannot be replicated, it cannot be counterfeited, and the owner can prove that they do in fact own it. Now there are a number of. Different NFT types out there. These range from digital art to music domain names to sports events. Now, that being said, one of those entity sectors that I'm dying to dive into is the crypto collectible one. These are the ones that have been grabbing all the headlines recently and battling a good many people, these collectibles. Be considered as being like baseball cards on a blockchain. Essentially, they are unique collectible images that have been minted mostly on the Ethereum blockchain. As an NFT, each of these images are unique and they contain certain characteristics. Some of these characteristics are shared with other images. Some of them are only shared with a limited view. The prevalence of these characteristics in the population of images in the collection determines the value, so you can think of it as a. Into those sports trading cards we had as kids, the rarer qualities of the card are more valuable. Some of the characters on the cards shared characteristics and features with the others. However, those that had the combination of the most rare elements were the most valuable and consequently came with the highest prices anyways. When it comes to crypto collectible NFTS, there is much larger scope for developing these unique images. They use a randomized algorithm to incorporate certain elements in the creation of these NFTS. Statistically, some are more likely to have the most common elements. There's only a few are likely to incorporate the rare elements. You can think of it as akin to a Pok√©mon character or your favorite baseball or football star and breaking them down into various unique components. These components could be strength, dexterity, Salmona, defense, offense, etc-etc. These qualities are then placed in a randomized mixer, jumbled around and then pulled out of the mixer as a unique collectible. Rinse and repeat for all of those that you want to make up your collection. This can easily be done on the blockchain because randomized number generators are provably fair. So are you guys still with me? If you are a little confused then don't worry, it'll be a lot easier to understand when we take a look at some examples. So let's do that, shall we? 

Different NFT Collectibles -:

1)Cryptopunks -: 

The first NFT collectibles issued on the Ethereum blockchain are also probably the most famous, and those are the crypto punks. These were a collection of 10,000 uniquely generated characters that took their inspiration from the London punk scene of the 1970s. They were also the first known NFT collectibles issued on the Ethereum blockchain back in June of 2017. Every one of these punks has their own ostensible personality thanks to their unique combination of randomly generated features. This includes everything from facial features to hairstyle, high accessories to head accessories, skin colour to facial hair. It's engineered rarity. Traits have been deliberately assigned so as to make certain pieces rare and thus precious and others more common. The prevalence of each of these traits in the punk population will determine the rareness offset punk and hence its relative value. So for example, we can take a look at some of the largest sales of crypto punks on the lava lamps website. Those punks that are the most valuable are aliens , apes and zombies. That's because there are only 9,24 and 88 of these types respectively. This just that though Crypto Punk 7804 is an alien but is likely to be worth a hell of a lot more than another alien punk, crypto Punk 7523. That's because there are far fewer collectibles out there in general that have the rare combination of the forward cap height and small shades. There are many more. Have an earring, knitted cap and medical mask. This is how these collectibles get their rarity all of the human crypto punks are considerably cheaper, and that's because there are over 9800 of them. Still, the value of each will depend on what qualities they have now. Of course, it goes without saying that the crypto can't market has been going insane recently and you can get a sense of this by checking out this incredibly insightful dashboard over on June analytics. It gives an overview of the crypto market and the average sale price. Of course, it goes without saying that prices have been skyrocketing. They have become so popular that they've even moved into traditional auction houses like Christies. But if you think 17 million for an 8 bit style digital image of a punk is a lot of money, you will be pretty shocked by the sales over on Ether Rocks. 

2)Ether Rocks -:

These NFTS were minted in December of 2017 and there were only 100 of them. They were take on the simple childhood game where one would own a pet rock. Now these pet rocks are also unique in each of them will have a slightly different color shading. According to the Crypto Rocks website quote, these virtual rocks serve no purpose beyond being able to be bought and sold and giving you a strong sense of pride in being an owner of one of the only 100 rocks in the game. Cool. I mean, I also had a strong sense of pride in the physical rock I carried around in school. That was until bullies kicked the crap out of me. Then the price turned to pain and long lasting pain that I'm used to this day. But that is neither here nor there. These NFT rocks have become incredibly valuable. As mentioned earlier, one of these went for $1.3 million a few weeks ago, but things have only gotten more crazy since then. The current floor I minimum sale price currently stands at 800 ETH, or $3 million. Truly extraordinary. And something that did not escape the indication of many inside and outside of the crypto space. News articles covered ad nauseam. Now, of course, there was value to these NFTS as they were a classic. They had a history and they were over four years old, which is a long time in crypto.  However, we've also seen similarly crazy activity in NFT collections that were issued just this year. 

Bored Ape Yacht Club -:

One of the most well known of these was the bored app Yacht Club. Now I'm sure you guys may have come across these pretty epic looking apes on Twitter before. These were a fair launch crypto collection of 10,000 different bored ape NFTS. They were issued in May of this year with a price on mint of 0.08 ETH about $168 at the time. They're pretty similar to the crypto punks in the sense that the qualities of the apes were randomly generated, those with rarer qualities were way more valuable when they hit the open market. However, there are some other qualities that come from owning one of these entities that are unique to the bored ape yacht club, for example. Holding one of these gives you exclusive access to Members only, areas in the Metaverse who needs those nightclubs anymore. Now, on top of this, members of the eight club get access to exclusive merch drops that only they can buy. This allows those who are part of the club to flex their credentials in the real world. And fun fact, some of these merch items have even been listed on. Today, for thousands of dollars. So you know there is demand there. So how have these NFT's been doing on the open market? I mean they were after all, sold for only about $170 a few months ago. Well, according to this report by messari, the floor price of these eight has been exploding.

Messari report

 The current floor price for a broad ape on open sea is about 33eth. Yeah, almost $100,000 in Fiat Funny money. These. Yetis have become so popular that the likes of famous sports stars like Stephen Curry have also joined the club and bought their own NFTS. His particular ape was bought for 55eth about two weeks ago, so all those people can hold apes now have a famous person in their club which makes that membership even more valuable .Now something else that I found really interesting about these is the ability for them to mutate. Yes, I know that sounds crazy, but bear with me. Basically what the Yacht Club creators have developed is something called mutant serum. When this is applied to the board ape NFT, you are able to mint a completely new and mutated ape. These 10,000 mutated apes are also combined with newly issued mutant apes that have been minted. They are now trading on open sea and the floor price on a mutant ape is 4eth. So quite simply, if you held a board ape before the AirDrop of this mutant serum. You could get another NFT that now has a value of over $24,000. This is a completely new slant that NFT collectibles can take, and it gives them even more value. Oh, and on top of that mutation, bored ape owners were also airdropped with a unique dog, NFT, to accompany the ape NFT's. These dogs are now trading with a floor price of almost three. Now check this out. It's a collection of 101 board ape Kennel Club. He's going for between 1.5 million and $2 million. And remember, these were NFTS that were airdropped for free mind blowing. Right now, boats are not the only NFT collectibles were issued this year, which are seeing an explosion of interest. Another one is pudgy Penguins, which launched about two months ago. 

Pudgy Penguines -:

This was a collection of 8888 Penguins that have the same MO when it comes to Engineered Rarity, they sold outto the public back in July, within 15 minutes, it's been one of the most traded collections recently, as people speculate on whether it capture the same interest as the APE club, the floor price on these guys is about 2.1 ETH. Oh, this one was actually really interesting. It's loot for adventures, which is merely a collection of randomized collection gear. Basically just eight random items stored on chain. Now, this is particularly interesting because collectible itself is randomly generated based on the wallet characteristics minting it. Those who bought it initially had a hand in its randomized rarity. Honestly, it's a really mind-blowing collection, and I can't do it justice here, so feel free to watch this YouTube video by the folks over at Bankless.

click on me to watch bankless video . really did find it fascinating, and all of these collections I've talked about are only ethereum based. Other blockchains, like Solana, are also becoming exciting NFT ecosystems. OK, so I've talked a lot about NFT collectibles, and I'm sure there are many of you out there that are saying. "MrCrypt"WTF. These are all hype. How can they possibly be worth anything? Well, let's explore that, shall we? 

Do NFT Value to anything?

NFT Value

When lockdown restrictions were eased recently, I took the opportunity of visiting the Tate Modern galleries here in London. As the name suggests, this is a place to go to see modern art, and boy, do they have a lot of it. Now. I am no art critic, and I'm certainly no expert, but I found a lot of the pieces there. Pretty uninspiring, which in some cases is putting it mildly .A painted polygon on a wall for instance. But not only did these pieces leave me cold, but the prices some of them commanded were jaw-dropping and this is not a new phenomenon either. There's a long history of some pretty questionable to my mind, at any rate, modern art that has gone for eight figures at auction like  painting Mark Rohtko's untitled yellow and blue was purchased for 46.5 Million $. Now the point I'm trying to make here is that people attach value to certain creative works for more reasons than just the aesthetics of the pieces themselves. A replica of anyone of these expensive modern art pieces will be worth pennies, even though from a visual standpoint it is just as appealing. Part of the reason that collectors will splurge vast sums of money for this art is because it's incredibly rare. It's a famous piece that will grant the owner a certain degree of prestige. They can show it off to all their billionaire club friends. This is exactly the way I view entities of collectibles and digital art. Sure, it may not appear to be the most attractive collectible item. But that's ancillary to its value. You own an exclusive item that no one else does, which is rare and in demand. It gives you access to a certain claim and comes with a level of prestige. In fact, rare items on a blockchain can be considered even more valuable. Firstly, they're 100% verifiable and impossible to replicate. Yes, you can always download the image and have a copy, but you don't physically control the NFT. It's not yours. It's easy to prove. In the traditional art market, you're going to need professional appraisers to examine the piece to prove its authenticity. Secondly, these NFT collectibles are easy to store and transfer. All you need is an ethereum wallet to store it and to send it all you need to do is authorize a transaction with traditional collectibles and art. You need to ship them, insure them, and secure them. These add to costs and still cannot 100% ensure the security of the items. Theft is commonplace. Not so. Within a team, unless you're extorted and forced to send over the NFT through a $5 rent a, you should be fine. OK, so now we see why the prices of NFT collectibles are going off the chain, if you'll pardon the pun. But there is one way more fundamental reason that NFTS have value, and that is something called the flex factor. 

Flex Factor In NFT-:

A few weeks ago, Arthur Hayes, the founder of Bitmex, wrote "Rock , paper , scissors say go"piece on the NFT market. As we know, Hayes is a Bitcoin trader, so it was interesting for me to read his perspective on NFT Collectibles, and Boy was it a spicy one. He basically boiled down the underlying value of the NFTS to their ability for the owner to flex. Basically, for the owner to show off that they have said not in a time of restricting global travel, global lockdowns and a shift to online life. People have been looking for a new way to show off their digital wealth. This is actually existed for a number of years in the online gaming space. Gamers would collect gaming skins, which are basically just the items that are worn by an online gaming avatar. Now this market is worth an astounding $40 billion. That is the value for gamers to be able to show off their call looks to fellow games using game items can't even be externalized. They exist siloed within one particular game. It just shows how important the flex is to the online gamer. Not only that, but think about some of the items that are flexible most of these days. Hayes, you use an example of $1000 Balenciaga sock sneakers, but I haven't even better example Balenciaga, Crocs. Yes, these are a thing where people could pay $1000 in order to wear a shoe is almost universally considered to be ugly AF. Despite this, though, these sold like hotcakes, and that's because they are quite a flex good. According to Hayes, these goods have to meet three main criteria. The good must be intrinsically worthless, or there is a much cheaper substitute that achieves the same function. Possession of the goods should confer membership of some sort of community. The goods should be limited in quantity or otherwise scarce. When it comes to the first point, the Crocs are almost worthless. Well to me. At least they look so ugly. Moreover, if I wanted to wear ugly shoes in public, I could easily wear a pair of 30 quick rocks instead, or as many elsewhere on social media have pointed out, my old pair of trainers. Thanks guys. Anyways, the possession of these Crocs confers a certain prestige and gets me into an exclusive club. The club of Rich folks who would spend over 1K on shoes formerly only used by gardeners and boomers. Finally, these balenciagas were limited in quantity. This, of course made them rare, which by the nature of supply and demand makes them more valuable. Hayes then compares these flex criteria to those going on in the NFT space. More particularly, he applied it to the ether rocks. We know that they are intrinsically worthless and not even aesthetically pleasing, and they confer a digitally secure right of ownership for an incredibly rare NFT, of which only 100 exists. Now I can tell you for certain that I would be a hell of a lot more comfortable flexing a JPEG Roack. Cross imagine what the bullies would have to me if I wore those now jokes aside, that is exactly what NFT owners have been doing. People have been flexing their NFTS online as profile pics on social media. It confers that steam that people tend to get when they drive around town in a Lambo, for example, only this time millions more can see it online. And it's 100% provable. No questions of whether it's a lease or a friend's car, for instance. It's a really interesting post from Arthur and I highly encourage you to give it a read. I've linked it below. Now of course, I'm not saying that everyone who's buying these entities is out there trying to flex their crypto. Well, indeed, there are many that hold millions worth of entities and are anonymous. However, I think it would be naive to think that this is not a large factor in the demand for these assets and that's it, for most of my post on NFT's today. However, there are still many questions that you guys may have of these assets, so let me address some of them. I'll start by saying that the NFT sector, it must look like it's a bit overheated. There is a lot of hype around some of these elections and already we're starting to see trading volume falling for some as well as the floor prices. Indeed, in the long run it's likely that 95% of the entities that are being minted today will be worthless in five years. Moreover, there are many who believe that NFT sales are being used as a method to launch the crypto. My view is this. Yes, it is likely that the vast majority of NFT's will one day be worthless, but. This is also the case for most of the cryptocurrencies that have come and gone over the past ten years. And while there may be some who are using NFT's for illicit purposes, this does not automatically invalidate all of the organic demand. There is also it's a well known fact that the traditional art market has a massive money laundering problem and in that case the transactions or art cannot be tracked on an open and transparent blockchain when it comes to their fundamental value. I can see it. I can appreciate the excitement that there is for some of these collections. I can understand why there's so much demand to huddle a bored ape or a crypto punk. It's rarity, it's esteem, it's community. It's the ability to flex that NFT where you see fit. As for me personally, well, I've not yet bought any. The NFT collectible rabbit hole is just as deep as the one folks disappear down when they first discover crypto. However, it's a rabbit hole that leads to adverse, which I am increasingly itching to explore. That's all folks. My attempt at an NFT collectible deep dive there is still so, so much more to cover though, so I'm keen to hear from you guys now. Are there any other collections that I should have my eyes on? And where do you folks think the energy sector is heading, bubble or more? I'd love to know. So please fire those comments down below. Oh, and while you're down there, you have to check out in comments.. And one final thing, if you love this content then please share to your friends and family who are interested in the crypto world , to read my super interesting post on crypto click on me.

Thank You that's it for today.


Popular posts from this blog

What is Tectonic Crypto Burn Mechanism for Tonic | How To Stake Tonic Explained 2022.

    Table Of Content -: What is Tectonic Crypto Burn Mechanism for Tonic? Why is Tonic Going down? What is Tectonic? what is Tonic ? What is Tonic Staking ? How Does Tonic Staking Works? Lending Assets Borrowing Assets How to Stake Tonic? How to Unstake Tonic? What is Tectonic Crypto Burn Mechanism for Tonic? The answer is Staking , as more people borrow and repay their loans on Tectonic , the staking module will buy more TONIC off the market resulting in a lower market supply. Why is TONIC going down ? Tonic is going down because of two reasons-: 1st)The Staking Module buying more Tonic off the market resulting in a lower market supply , thus high burn rate. 2nd)TONIC Iis based Kronos blockchain , and as kronos is going down so expecteadly TONIC is also going down. Disclaimer -: I need to give you a disclaimer before I talk about this bill. I am not a financial advisor , I'm just an educator and this blog post is written with the sole purpose of providing you factual information.

What Is Crypto Mining | For Beginners.

Hi folks. Do you know something I've learned recently is that it's very, very useful to know one of these shadowy, supercoder types who keep Mr Ajit Doval awake at night? Well, not literally. Well, I suppose you never know. Anyway, I have a friend. Called Rakesh and he is a whiz with computers and he has very kindly put together this little beauty for me. Now it doesn't look like much, does it? Well, this is actually my very first crypto mining rig. Crypto Mining In India!?!.Now, wait, I know what some of you may be thinking. Guy, come off it. Crypto mining is big business. You'd need a room filled with thousands of those if you wanted to become a crypto miner. Well, you're half right. But before I talk about this chap here, I want to talk briefly about the mining process, because it's one of the most technical. And tricky aspects of crypto to try and wrap your brain around so. Here goes, and. So let's start with Bitcoin now.  How Is Bitcoin Mining Done? Her

Bitcoin Mining Climate Change: How Much Does It Really Matter?

  What Is Crypto Mining? Bitcoin, Ethereum, Litecoin and a few other large cryptocurrencies use a proof of work consensus mechanism. In simple terms, a consensus mechanism is the process used by multiple entities to reach an agreement about. Fact, as a simple example, let's say you're hanging out with eight of your friends and you're deciding whether to go to the movies or to the beach. The consensus mechanism for that decision could be a simple majority vote, or it could be that all of you must vote to do the same activity. Cryptocurrency works the same way, except instead of a group of friends deciding what to do for fun, it's a group of computers spread around the world deciding which cryptocurrency transactions are valid. Rather than confirm one transaction at a time, cryptocurrency networks group multiple transactions into a single block. Each block contains a record of the previous block, hence the term blockchain. For blockchains like bitcoins, they're reward