Before beginning your crypto journey, you’ve probably heard about NFTs—those cartoon monkeys that sold for millions.

In this episode, I’ll explain what they are, explore their history, and discuss both their benefits and drawbacks.

What is an NFT?

NFT stands for “Non-fungible token”, which doesn’t make things any clearer.

A dollar is fungible, as when you swap one for another, you have the same thing.

NFTs are another type of digital asset, but unlike cryptocurrencies, NFTs can store unique data, like images (think cartoon monkeys), or even text, audio and video.

What is beneficial about NFTs?

Despite the ability to store data, it’s the NFTs existence on blockchain which makes it useful.

As the blockchain is an immutable record, meaning it cannot be changed, anyone can verify ownership, scarcity and authenticity of said data.

Let’s look at an example to make things clearer:

• You’re a popular musician with an upcoming concert.
• You decide to sell 1000 tickets as NFTs, where each ticket is an NFT.
• The blockchain guarantees only 1000 tickets are sold, enforcing scarcity.
• Tickets can then be freely traded online, minimising issues like fraud in traditional ticket resale.
• You embed royalties in the NFT, earning a small commission every time it’s traded, ensuring you benefit from secondary sales.
• After the concert, the NFT tickets act as collectibles and or “proof of attendance”.

Real World Application

Droid Capital - An NFT Investment Fund

In the previous episode, we discussed DAO’s, which enable governance on the blockchain.

Droid Capital is a type of DAO too, except in this case, each NFT represents a vote and a share of the investment fund’s assets.