Introduction

In 2021, Beeple kickstarted the NFT industry’s boom with the sale of his digital artwork, “The First 5000 Days,” for a staggering $69.3 million.

When you consider the countless headlines of people making insane amounts by flipping NFTs, the insane virality of NFT collections like Goblintown whose artwork aesthetics deviates dramatically from the norm, and experts predicting the market to become an US$80-billion dollar industry by 2025, it starts to make sense why NFTs are a big deal.

What Is a Non-Fungible Token?

Non-fungible tokens are blockchain-based proofs of ownership over one-of-a-kind assets - whether physical like an actual painting or purely digital like a domain name. They exist on a smart contract deployed on a blockchain and all data, including its governing conditions, predetermined utilities, and record of ownership transfer are stored and verifiable on the blockchain. 

However, this doesn't mean that you can see the names of every person who bought an NFT. By using a blockchain explorer, what you can see are the wallet addresses where the NFT has been transferred from one to another. This is called provenance, which is essentially the history of ownership behind an NFT starting from the origin. 

NFTs have made it possible for people to own assets and have indubitable proofs of ownership over those assets because of blockchain. The implication of this is that as an owner, people can now exercise different kinds of ownership rights over the said assets which were not possible before (during the golden age of copy+paste), including the right to receive royalties, rent them out, or sell them anytime they want, among others.

How Does a Non-Fungible Token Work? 

In NFT speak, the process of actually bringing an NFT into existence is called minting, and you can do this either as the actual creator of the NFT or as a collector of NFTs on its primary issuance or first drop.

In general, an NFT starts with a smart contract that contains all relevant information such as its unique ID and metadata. It also observes a specific token standard depending on the blockchain where it will be deployed. For NFTs on Ethereum, these smart contracts must conform to either ERC-721 or ERC-1155, which govern the creation of non-fungible tokens.

An NFT works as a proof of ownership over an asset it represents through its smart contract, which assigns the asset’s ownership and manages its transferability.

As a creator, your first order of business is to find a platform that lets you create or mint your own NFT like OpenSea or LooksRare. It is worth noting that you don’t need to actually know how to write an NFT smart contract in order to create your own collection. 

On OpenSea for example, which is the most popular NFT platform and marketplace to date, you can mint your own NFT simply by opening an account, connecting your Web3 wallet, completing all the fields on its NFT item creation page, selecting which blockchain you want to mint your NFT, and clicking the “Create” button.

If you’re a collector, you can take part in the minting process for projects that have not been launched yet through a process known as NFT whitelisting. 

This allows you to get the dibs on the first NFT drop of a new project by having your wallet pre-approved, so that once the project launches and its first collection is released, you can be one of the first few to buy it before it hits the secondary market. 

In both instances, the process of creating or minting an NFT involves executing the code on the smart contract and having that information added to the blockchain.

Examples of Non-Fungible Tokens

The interesting thing about NFTs is that when it comes to aesthetics, there are no specific generally accepted standards to its success. While the artist behind it or the prestige of the company working on the project can lend to its creed, some simply went viral for reasons that confounded even the most seasoned NFT collectors. 

Here are some of the most popular NFTs and collections to date:

1. Ghozali Everyday - The collection consists of an Indonesian boy’s numerous selfies, which he took every day since 2017 when he was 18 years old. It went viral at the start of 2022 and sold for nearly US$1 million at its peak.
2. Nyan Cat GIF - The iconic rainbow cat GIF was sold as a one-of-a-kind crypto art for an astonishing US$580,000, a milestone that started to show to the mainstream public how it is now possible to genuinely own a GIF you can view a million times on the Internet, share as many times as you want, and even save and post on your own page.
3. Goblintown.wtf - This is one of the latest NFT collections that recently went viral, much to the astonishment of many. However, behind the horrible-looking goblins that come in drastically varied ranges is a very clever marketing move that shows how out-of-the-box storytelling can launch an NFT collection to unexpected success. Fun fact: Unlike most NFT projects, the Goblintown.wtf collection declares loud and proud that it had no roadmap and no Discord channel. However, they do hold Twitter spaces filled with incomprehensible goblin noises that the audience can listen to.
4. First-Ever Tweet - In March 2021, Twitter founder Jack Dorsey minted an NFT connected to his first-ever tweet, featuring the line “just setting up my twttr.” It was bought for US$2.9 million by Iranian crypto entrepreneur Sina Estavi. He recently made headlines again in April 2022 when he tried to auction the NFT for 14,969 ETH or about US$50 million, but no one bid more than US$280.

Key Takeaway

Non-fungible tokens or NFTs started a paradigm shift in the way we see ownership of assets, especially digital ones that were simply copied, pasted, and shared endlessly for years without regard to who owns it.

It also struck a chord when it came to digital assets that gamers worked hard and spent hours and money to own, only for it to fall at the mercy of game developers who could shut down the game at any time.

NFTs come in different forms to represent ownership of virtually any kind of asset. They exist on the blockchain, which means regardless of the success of the project behind it, you get to retain ownership of the asset and sell it at any time on secondary markets.