NFT Crypto Explained


James Bachini
Rating: 5.00 | 741 views | 14 likes


help grow the channel, hit the like button In this video I explain how #NFTs or non fungible tokens work and how the ecosystem using them is evolving. 00:00 The Start Crypto Punks 00:28 How NFT’s Work 01:L18 Beeple Auction 02:00 The Metaverse 02:33 Investing In NFTs 03:30 NFT Funds 03:47 Conclusion There’s more content in the blog post at https://jamesbachini.com/non-fungible-tokens/ On watching it back I think there’s a small mistake in the video where I said NFTX buys up NFT art work. This isn’t the case holders which actually provide NFT’s as liquidity in exchange for PUNK tokens. Most of the code I write and talk about is open-sourced at: https://github.com/jamesbachini Subscribe to the channel for updates And if anyone happens to read this far down the description please hit that like button for the YouTube algorithm. Thanks for watching! In 2017 two developers named John Watkinson and Matt Hall created a program to automate the creation of 10,000 punk avatars. They then modified a standard Ethereum smart contract to include a hash of the 24 pixel punk image and added ownership and transfer functions. The crypto punks were released for free and anyone with a metamask wallet in the summer of that year could have claimed one. Today they are considered seminal to the entire NFT movement and the most common of these punks are worth more than $30,000 US dollars, some have sold for millions. So How Do #NonFungibleTokens Work First we need a basic understanding of the ethereum virtual machine. Consider a peer to peer network where code known as smart contracts are executed by all the connected computers across the world and a consensus is reached confirming the results of that code execution. If a user executes a smart contract function to calculate 2 + 2 all the computers on the network agree that the answer is 4 and that output is finalised in a blockchain. An NFT is a smart contract that runs on this ethereum virtual machine which contains data and ownership information. Everything we consume online can be broken down to data, images, music, text, video it is all 1’s and 0’s. A unique representation of that data, known as a hash can be stored in a NFT smart contract. Ownership of that data can be transferred between ethereum accounts using smart contract functions. In practice a creator will use an app like #rarible to upload an image and put it up for sale without ever needing to understand the elegant beauty of the underlying technology. In December 2020 #Bitcoin entered a new bull market and NFT’s became the most talked about digital asset. That’s when things started to get a little bit wierd. An artist called Beeple who had been creating one piece of art every day for over 13 years started minting his art work as NFT’s. These became highly valued which culminated in a piece of art known as “The First 5000 days” being auctioned at the infamous Christies Auction House in London. It was the first NFT to go on sale at a prestigious fine art auction and it didn’t disappoint. When the hammer dropped the leading bid was $69 million US Dollars. So NFT’s are clearly useful for monetising art work. They can also be used in the same way to sell music rights with the Kings of Leon recently minting #NFT’s. Perhaps the most interesting use case is the sale of digital land. Let’s enter the metaverse. This is #decentraland. A 3d world where you can roam around chat to other users, gamble away your cryptocurrency and browse galleries of digital art. It’s a little ruff around the edges but in my opinion it provides a glimpse of what the next big social network might look like. I’m not saying that Decentraland specifically will become as big as Facebook just that it feels like there’s something compelling and interesting happening in this sector, it’s just not quite ready yet. Land here is valuable too, and it’s sold as an NFT token of course. You can purchase land and import 3d objects and buildings into your space. So how can you invest in NFT’s and what are the risks? You’ll need an #ethereum wallet such as #metamask and some cryptocurrency. You can then make purchases using a secondary market like #OpenSea as easily as checking out at an online store. NFT’s are stored in your digital wallet and you can list them for resale if you so wish. A market for flipping NFT’s has developed in the last six months and it’s become a lucrative business for many.


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