What are NFT’s?
NFT stands for “Non-Fungible Tokens”. They are digital products that only exist online. There are hundreds of thousands of collections of NFT’s. At the moment, most are art, but there is a growing number of photography, 3D art, and music NFTs being created every day. In the future it could be everything from digital clothes to metaverse real estate, movies, and more.
Big word.. what does “fungible” mean?
It means it is interchangeable or swappable with anything else. For example all currencies are fungible, every dollar you have can be swappable with another dollar and it’s exactly the same worth.
Non-fungible is the exact opposite. It means it is rare, unique and one-off. This means each NFT is the only one of its kind in existence, printed with a unique code.
OK, so what’s the big deal, why is everyone getting into it?
NFT’s have been around since 2014 but only started getting popular in 2020. It is a technology of representing a digital product, a product that exists online only and that is tradeable on the blockchain. It started becoming so popular, NFT’s that were purchased for a few hundred dollars could resell for 10x their purchase cost within months.
But we could buy digital products in World of Warcraft (WoW) and Skyrim and other online games for years, why is this any different?
NFTs are coded to a universal standard, if you code something as an NFT, it is tradeable across many different platforms and eco-systems within the same blockchain. Digital goods you bought in WoW stay in WoW. What if the game developers stopped supporting WoW and shut it down? All your digital goods you purchased will disappear. However, NFTs can be tradeable outside of the system with anybody that is on that blockchain.
So it’s a standardised format for digital goods, right! Uh.. What’s a blockchain?
This is just a fancy word for a big ledger statement of digital transactions. You have a bank account and you get statements right? If you get statements once a month you will have a stack of 12 of them in a year. You put them in a folder and next year you get another folder. You put all those folders together. This is basically what block chains do. Each block is a list of millions of transactions. When that block folder gets filled up, a new block folder is created and chained to the previous one, ie a “chain of blocks”.
OK… but I have all my statements on my hard drive and the bank has a copy, so what?
What if some hackers hacked into the bank and changed all the figures? Deleted all your money and added it to theirs? Difficult but not impossible.
However, what if all the bank transactions are stored on a blockchain? Blockchains are replicated across thousands of computers around the world. These are called nodes. Each node talks to other nodes, and compare their folders. If a hacker changed the files on one node, they have to change the same file on all the other thousands of replicated nodes around the world, to get away with it. The odds of this happening are practically zero. That is why blockchains are so secure.
We would need an asteroid to hit earth and wipe out humanity before we destroyed all the thousands of computers holding blockchain data. As long as humanity is around, your data is secured forever on the blockchain.
OK, back to NFTs. What do they have to do with blockchains?
The record of your NFT ownership is stored on a blockchain. The most famous blockchain for NFT’s is Ethereum. Ethereum may be more well known as a digital cryptocurrency, but the underlying blockchain is what powers everything. There are other blockchains too, hundreds of them, each specialising in different things.
The actual content of the NFT (ie the jpeg picture or the music MP3 file or the artwork), is normally stored in an Interplanetary File System, or IPFS. The record of ownership of that NFT is stored on the blockchain. This record is like the title papers to your house or the registration papers of your car. The registration paper lists the car type, colour, VIN number, and your name and contact details. The car itself is in your garage. Similarly, the blockchain stores your ownership of the NFT. The original content is in the IPFS. And you can store a digital copy on your local drive of course.
OK, so I get NFT’s are a digital product that is unique and exclusive. I can trade NFT’s with other owners. The record of my NFT ownership is on the blockchain and no hacker can steal it from me. Wait.. so how do I actually buy an NFT?
These platforms are the crypto version of ebay, amazon, and every other online store on the internet. Soon in a few years, every online store will be able to sell NFT's.
Some marketplaces have the ability to let you buy NFT's directly with Credit Card. CryptoCrewz Recordifly does that. However, eventually you will need to learn how to buy directly in Crypto.
How do I do that?
You need to set up a crypto wallet. The wallet is sort of like a normal wallet in your pocket but also combined as a blockchain browser, to show you everything that you own that is sitting on the blockchain. In your crypto wallet you store cryptocurrencies and can view all your NFT’s.
There are many crypto wallets. Metamask is a widely used non-custodial wallet. Alternatively you can use a custodial wallet like Venly-Arkane. We offer both on our website. Click here on how to set up:
- Venly - Go to venly.io and just login in with your social media accounts and choose a PIN. Then go to the venly home page and click "my wallet" to see your new wallet.
- And NFT marketplaces like CryptoCrewz Recordifly will setup a new crypto wallet for you automatically if you don't want to go through all that
What’s custodial mean?
A non-custodial wallet is sort of like having all your assets in a steel safe in your house. You are responsible for keeping the password and the access codes to your assets secure. Do not show anybody your secret phrases. Hackers could then access your wallet and empty it. A custodial wallet is like putting all your assets in a deposit box in a bank (ie they have “custody”). They help you with customer service and other extra features, and you login to your wallet and see your crypto money and goods on the Venly website. However, you need to be aware you are trusting your assets with a third party. Venly is one of the largest non-custodial wallet providers in Crypto at the moment with a good reputation but no one knows the future of course. If you are new to Crypto and not too tech savvy we suggest starting with Venly and then moving on to Metamask. After that you can move to a hardware wallet if you wish.
What’s a hardware wallet?
If Metamask is the equivalent of a safe in your house, then a hardware wallet is the equivalent of a bomb proof zombie apocalypse panic room. Ledger Nano and Trezor are two hardware wallet providers. However, lose your seed phrase and you could lose all your crypto forever. It’s a big responsibility! If you are not a crypto billionaire then don't worry about this step right now.
Right! So NFT’s aren’t a scam after all? Everyone says they are a scam!
Well… not so fast. NFT’s as a concept is definitely not a scam. However, the NFT industry is very new, it’s known as the Wild West of the internet. You can find real gold but you may have to wade through muck to get it. There are plenty of ways to get scammed, just like in any venture. The internet in 1997 was a scam and a waste of time. Hear it direct from Letterman...
Here are the 3 top NFT scams to look out for:
- Rug Pull
If you’ve heard of someone being scammed in an NFT “rug pull”, a rug pull is exactly that, standing on the rug and having the rug pulled out from underneath you and you land flat on your back. There are plenty of NFT collections and spruikers out there trying to part you from your hard earned money with promises of ridiculous profits, and a roadmap of a dazzling universe of functionality. You then buy the NFT, they sell out, and they disappear. If you like the NFT you purchased, well.. no big deal, but it’s not a pleasant experience, especially if you wanted to see the eco-system grow. Sometimes things happen and strategies and visions and direction change from the creative team, and that’s fine, but disappearing in the middle of the night is pretty bad form!
Ask yourself the following questions before you invest in an NFT collection.
- Do they have a proper website or does it looks like it was patched together by a 13 year old
- Are the executive team members behind the NFT real people? Do they use their real names or just a twitter or insta handle name? Can they be contacted?
- Do they show their faces? Can you google them and find out if they have the experience to do what they say they will do?
- Is the NFT roadmap feasible? Can someone really build a metaverse game to compete with Facebook in 6 months? .. I mean.. come on, really?
- Do they have a community of people interested in the collection?
- NFT copy scams
- Is the NFT you are buying minted off the original website or are other promoters trying to sell to you directly?
- If the original mint is sold out, and someone comes to you with an offer of an “extra” un-released stock, be very careful, it’s probably fake
- Phishing scams
- Be careful what websites you connect your crypto wallets to, and what you agree and confirm on the connection. You may be agreeing to buy something that you don’t know about.
OK, I’m pretty careful. So what NFTs should I buy?
What are your interests? Do you like Art? Music? Fashion? Photography? There are plenty of content providers that will cater to your every need with products sold as NFT’s. Buy an NFT because you like the content and you like the culture of that community. Maybe it represents you in some way. Maybe the brand calls to you and you connect with that community. Don’t buy an NFT for the sole purpose of trying to flip it for a profit.
But I can make money with NFT’s right?
Well, yes and no. And nothing we say should be considered financial advice. Buy an NFT because you like it, not for the sole aim of trying to sell it for more than you paid for it. You may find some NFT’s that become super popular, for example the “funny monkeys” (ie Bored Ape Yacht Club) went from nothing to a $150m brand sensation within 9 months. If you bought one at mint for $180 it may be worth $300,000 today. That is life changing money, yes. But is it a fad? Will we still be talking about them in 2 years? Will celebrities keep buying and influencing them or will they fade out in the next news cycle? The NFT’s with the best chance of long term growth are projects where the NFT has utility.
What do you mean by utility?
The NFT has to represent more than just the token itself. It needs to be a membership to a community and a brand and have access to exclusive events or products that are not available anywhere else.
For example, CryptoCrewz NFT’s are a gateway to a music and fashion brand eco-system. You have to own the NFT to be a member of an exclusive club, to get the first news on new sneaker drops or unreleased music song hits from your favourite artists. Eventually it will be a ticket to online streamed music concerts and even VR metaverse content. CryptoCrewz is a brand, not just an NFT.
Ask yourself if the NFT collection you are purchasing into have any utility like this?
Where does bitcoin sit in all this?
It doesn’t … you don’t use bitcoin to do anything related to NFT’s. You don’t need bitcoin at all. If Ethereum is the “oil” of the crypto world, then Bitcoin is the “gold” of crypto. You can store your wealth in Bitcoin if you want, but oil makes the world go around. All the newest decentralised finance apps, NFT’s and exciting projects are all Ethereum based. The majority of software developers now understand Solidity, the programming language of Ethereum. And with the launch of Ethereum 2.0 in the middle of 2022 it will soon bypass Bitcoin to be the largest crypto platform in our opinion.
So are CryptoCrewz NFT’s on the Ethereum blockchain?
We are releasing our collection on Polygon Level 2 Ethereum. How do Level 2 blockchains work? Firstly, to write information to the Ethereum blockchain costs fees, also known as “gas”. There was a time in 2021 when NFT’s became so popular the Ethereum blockchain was overworked, and to confirm your NFT on the blockchain could cost over $100 in transaction gas fees, up to $1000 and more in peak hour. This is ridiculous if you paid only $500 for your NFT!
So we decided to launch our collection on Polygon, same as many hundreds of other NFT collections in 2022. All the major NFT marketplaces accept Polygon. Polygon is a blockchain that stores a whole lot of transactions in their blocks, bundle them up, and then confirm them onto the main Ethereum chain in one batch. So that expensive transaction gas fee is now divided among thousands of users, so it is much more user efficient. It has the best of all worlds, scalability, security, and decentralisation.
I heard NFT's are really bad for the environment?
The original ethereum mainnet is currently energy intensive because it uses a concept called "proof of work", which is a fancy engineering term that means it chews up a lot of computer mining energy to keep the whole thing running.
However, that will all change when ethereum 2.0 comes out sometime in 2022, where the new technology will reduce the energy usage by 99.9%.
There are other blockchains out there which are total 100% green and zero carbon footprint already, Polygon blockchain is the leader in this sector. All CryptoCrewz NFT's are on Polygon. That is why we call them "eco-NFT's"
So how do I buy a CryptoCrewz NFT?
- Sign up to the various pre-sale lists that come up regularly from your favourite artists so you don’t miss the launch date. New artists come on board all the time and more and more are in the pipeline. Start a collection!
- Get your crypto wallet sorted before hand, sign up to either Metamask or Coinbase or Venly Wallet. Or just wait and buy direct with Credit Card by setting up a free CryptoCrewz Recordifly account. Note that if you use Credit Card you will have to fill out KYC (Know Your Customer) details as the banks need to make sure there is no funny business going on with money laundering and all that. This is a 5 minute thing you only do once, like show your Driver's License, proof of address etc. If you are under 18, talk to your parents.
- Transfer some money into crypto and fund your crypto wallet so you are ready to go on the sale date.
- On the day of sale, click buy, just like any online shopping. The NFT will be minted onto the blockchain and viewable in your crypto wallet.
- Congratulations, you are now a member of the CryptoCrewz community – welcome Crewzer!