What is an NFT? (Non-Fungible Tokens Explained)

 We were looking them up they are really confusing so in this video you're going to learn exactly what they are why they are valuable because that was our biggest question and what the buying process looks like so a non-fungible token also known as  NFT  is a type of digital token or asset a common analogy is to think of these as digital trading cards or digital paintings whenever you buy  NFT you are basically just buying the rights to that specific asset now non-fungible means that it can't be changed whenever it is created you can't split it up it must be distinguishable from something else unlike a bitcoin one bitcoin is the exact same as another bitcoin well with NFTS they're never the same they're always different and also a token it's just a small piece of data that you own together  is a token that you own that doesn't change throughout time so that's the basics but when it comes down to  actually just a piece of data that is owned by an address and whoever has the password to that address they own that piece of data and this piece of data can be bought and sold to different addresses and that data is verified on a blockchain you can actually check the owner history is always trackable with NFT for example this  that sold for 600 000 is essentially just a small URL that is owned by an address the only thing that that person owns is a tiny piece of data now that piece of data points to a server somewhere that usually hosts an image and technically whoever owns that server could change the image it's important to know what you are actually buying when you buy  NFT you are buying a piece of data that points to a server that hosts either an image or a Gif you should know that the server could change or that the image and Gif could change it's actually the specific piece of data that you actually own on the blockchain not the access to the server and not the image or the  but rather that tiny piece of data that points to the server so in a sense when you buy  NFT you're buying a small piece of data that represents something larger kind of like buying a stock you're not buying the entire company and unless it's a dividend stock you're not actually getting anything from it this brings us to  would you want to buy NFT and but right now the main reason most people are buying is because they see NFTS as collectibles in the investment category so let's go over four main things that make NFT valuable number one first so just like bitcoin is so popular because it was the first cryptocurrency the first NFTS of specific creators or businesses will also have value for example Pokemon cards are quickly gaining popularity and the most expensive cards are those that were produced in the first edition so let's say if you have the first  it will likely have some perceived value the second thing that makes  NFT valuable is its utility which in other words is the real world benefits so imagine if  was still live he sold 50 NFTS now by owning one of them you could have lifetime access to any of the shows that he participated in now these NFTS would quickly become popular and very expensive due to their real world benefits personally this is the only reason  would buy  NFT is if it had a real world benefit and  think in the future almost all NFTS will evolve to have this sort of aspect creators will sell NFTS for income and in return have a membership community or do a monthly lunch meeting or something in that fashion the third thing that makes NFT  valuable is if it's unique or rare so for example think of the  anyone can have a copy of the  room but only one person or a museum in this case can hang up the real painting by  for everyone to view now the same goes for the original constitution of the United States or a babe  signed baseball they are rare imagine if  only minted three NFTS they would be very valuable because there's only three originals even if they're just pictures of the universe other people could have that picture they wouldn't have the original one minted by Stephen Hawking the last thing that found that makes  NFT  valuable is ownership history so for example what's your favorite celebrity mine personally is Robert Downey jr so let's say he decides to sell his leather jacket and buy a new one well when he first bought that leather jacket maybe he paid two hundred dollars for it but me  might pay 800 just to have the same jacket  jr wore now the same goes for Nfts someone might be willing to pay a million dollars of an image of a duck that  owned at one point so keeping these in mind you should think about what actually makes  the first of its kind if it has a real world benefit if it's rare and if someone important owned it these are questions to ask yourself during valuation  first tweet for two and a half million dollars fit any of these let's go down the list is it a first yes it actually is the first NFT  in that category second does it have utility it does not you don't get to change the tweet you don't get to advertise your business or something like that third is a unique yes it is unique lastly what about its ownership history well this is actually a no yes it is Jack Dorsey's first tweet but nobody famous has actually owned the specific NFT yet to fit this category for example maybe it was my tweet and then Pewdiepie owned it