🥳Getting started with NFTs

What is an NFT?

NFTs (non-fungible tokens) are digital assets that cannot be replaced by other identical digital assets and is a new application of blockchain technology that allows for the verification of ownership and authenticity of a particular asset. In technical terms, they are a form of cryptographic assets located on a blockchain – each token is recorded on a public digital ledger or list of some sort. To learn more, please read our blog article, "What is an NFT? Improve Your Knowledge of Non-Fungible Tokens"

What types of NFTs are there?

At a high level, NFTs can be categorized by their mediums and uses, including but not limited to art, music, game characters and items, virtual lands in metaverses, and domains. The NFT concept is so new that more and more types continue to be innovated, such as event tickets and POAP (Proof Of Attendance Protocol). NFTs can also belong to a collection, or stand alone as a 1/1 piece.

There are four main types of NFTs that are popularly traded.

The first is Profile Picture collections, often called “PFPs”, where each NFT can serve as your online identity, identifying you as a part of a community of holders.

These projects often aspire to build a brand behind the artwork or community, and there can be many perks of being a part of the exclusive community, such as discussing “alpha”, taking part in events (online and real-world), and even just making friends and connections.

For me, I use my monke from the Solana Monkey Business collection (SMB) as my online profile picture, which people mostly use to identify me. I enjoy being a part of the DAO (MonkeDAO), taking part in meaningful conversations and joining their events. We’ll talk more about DAOs in future.

The second type is gaming or metaverse NFT collections, which can be in a number of forms, such as metaverse or game passes which gives exclusive access, character NFTs, land or rooms, (usually with varying sizes, types, locations, and use cases), equipment, skins, vehicles, and more.

A metaverse I’ve been checking out is called Yakuverse. I can buy different types of apartments under “Capsule X” collection to chill with friends, play games and more. I can purchase a “Yaku X” NFT to have a customizable playable avatar in the Yakuverse. They also have a “Yaku Engineering ONI-S01” collection where I can get customizable motorcycles to use in the Yakuverse.

The third type is utility NFTs, which gives you access to project-specific tools or rewards such as tokens and passive income. For instance, “RadRugs” gives holders access to their exclusive NFT security platform. “Shi Guardians” gives access to SolanaFloor PRO which has premium NFT analytics. “Sentries” provides enhanced staking rewards to their PFP holders.

The last type is 1/1 Artwork, usually by reputable artists such as John Le and Lisanna Haack. These are typically collected just for the artwork, to be a part of one’s art collection.

Of course, there are more types.

Music NFTs seem to be on the horizon with a lot of innovation happening, and I look forward to seeing them more in the space.

OG collections are the earliest to launch on the blockchain, such as the first on-chain generative NFTs on Solana called “Solarians” - animated pixel robots that will soon have 3D counterparts that can be integrated into metaverses. (Disclaimer: I used to run the Solarians team briefly, and am currently in the process of handing the project over to the DAO.)

“Frakt” is also an OG as the first generative art collection on Solana, and gives holders numerous utilities such as discounted loans, raffle tickets, and more.

There are certainly a lot more that are worth checking out.

What's so great about NFTs?

Firstly, they allow proof of ownership and the ability to authenticate assets. With an NFT, you can verify details such as who the owner is, who the creator was, when the token was created, and so much more.

Imagine if Eminem sold NFTs for his latest album - we’d be able to verify that he was the creator and the exact time that they were created.

If I bought one of them, I’d be able to prove that I own it. Being able to clearly prove that an NFT is authentic and that I own it is empowering.

Secondly, transferability and the ease for holders to trade these assets.

In most games, players would amass an insane collection of in-game items and when they stopped playing, those items would lose all their value. If they were NFTs, I could easily trade them on a marketplace for profits or store them in a cryptocurrency wallet forever.

Another amazing benefit of NFTs is the empowerment of artists and creators to monetize their work and collect royalties from secondary sales in perpetuity.

It is extremely easy today to mint a piece of digital art into an NFT, and list them for sale on an NFT marketplace such as Kyzzen.

Every NFT can have references to a royalty percentage and the creator’s wallet address, so that a fixed percentage of every future secondary sale can be automatically paid to the original creator(s). This is incredibly powerful.

NFTs have their clear advantages and use-cases.

Always DYOR before you trade

DYOR simply means "Do Your Own Research". This term is a popular phrase that aims to encourage newcomers to properly research and understand the asset(s) they’re investing in, as well as the risks involved in their actions.

Shilling is a common practice in the NFT space where people, especially influencers, hype NFT collections to make their own assets or those of others more valuable, and hence you should never simply accept random information from external sources (e.g. influencers, friends, videos, etc.) as financial advice and the sole reason for making trading decisions - more importantly, your need to invest time and effort into properly researching the NFT collection, and arrive at your own conclusions.