Recently there were many digital arts called NFT being sold for a lot of money. In this video, I explain what is NFT, how can they worth so much. Are they legit or are they just a scam? I’ll also tell you what I personally think about NFT. Enjoy!
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0:00 – Intro
1:04 – What is NFT
To understand why this digital art can worth so much, you first have to understand what is NFT. NFT is just short for Non Fungible Token. Non fungible means non replaceable, like our chou chou. There’s only the one and only chou chou. Token in programming term means unique id. Together, NFT means non replaceable unique id in the blockchain.
A blockchain is just a public record of the crypto transactions. Each of these NFT represents a proof of ownership of something, it can be jpeg, gif, videos, music and so on.
3:40 – Why does NFTs have value?
In the example of the chou chou, it is priceless to the owner, but is just a dirty pillow to other people. But if one day, the owner of the chou chou becomes a famous person, all of a sudden, many people will feel that the chou chou is valuable and is willing to pay a lot of money for it.
This is the same thing for many famous art pieces, like The Scream by Van Gogh, David’s sculpture. They have very high value, because they are the original piece and are unique.
The only difference is that now we happen to have the technology to create things digitally. Especially if it’s an art that’s created by a famous person, who then pairs it with a unique id. People are willing to pay a high price to buy it.
5:11 – Is NFT a scam?
Here’s the thing about prices, especially art and stocks. They can be any price that you value them at. Like the banana wall art, or the painting which shredded itself, or Gamestop stock, or McDonald’s Hello Kitty.
This has happened over and over again throughout history, like the 1990 Dot Com Bubble, or the Tulip Mania. I’m not saying that this NFT is a bubble, I’m just saying that anything can worth as much as they want, or as little as they want.
6:48 – Impact of NFT
Other than the art itself which is digital, everything else is real. The computer which stores it is real. The effect of the Ethereum blockchain on the environment is real. And with the popularity of cryptos on the rise, the Ethereum energy consumption has been skyrocketing.
As of making this video, the blockchain uses about 51.44Twh energy, comparable to the power consumption of Portugal.
And researchers found that more than of the energy comes from non renewables, which can cause environmental issues.
But luckily, the developers are planning to upgrade the blockchain to Proof of Stake to become more energy efficient.
8:23 – Should you invest in NFT?
I feel that the NFT is just a hype. Personally I won’t be investing in NFT as I feel it’s much easier to build wealth investing in stocks and cryptos. There’s a way to earn through NFT, and that’s by creating NFT yourself.
Going forward, I feel that NFT has a lot of use cases. It doesn’t have to be just digital arts. It can be used to verify ownership of properties, like houses, or pokemon cards, or perhaps even this chou chou.