This is an approximate transcript of my video What is an NFT and Why Should I Care? found on YouTube.
Hello, hello! Good evening, Happy Thursday and thank you for joining. So, tonight we are going to answer a burning question or maybe not a burning question, but a question nonetheless. Today we are going to tackle – What is an NFT and why you should care. I just want to start by saying you may not care. But, in case you are a creator or a creative of any kind, this is important to you.
We are just going to jump right in to start with some base definitions so that we’re on the same page as I think that’s probably the biggest barrier. Okay, what the heck is an NFT? What are they talking about? And just know the full name doesn’t really help unless you’re in the space. So, an NFT is a non-fungible token. Okay – still what does that mean right? A fungible token or something that is fungible is something that can be exchanged for another item of equal value. For me, the best and easiest example to give you is that if I had a dollar and I exchanged that for another dollar those dollars have the same value. It does not matter that they may have a different serial number on them or that they were printed at a different time. Those two dollars are equal. If I give you one and you give me one, we haven’t lost or gained anything. The same thing applies if I give you a dollar and you give me 10 dimes or four quarters. You get the gist. A non-fungible token or item or asset is something that is unique and cannot be exchanged for the exact same item. So that’s what we are talking about when we talk about NFT’s as a base. A non-fungible token is a unique asset, and in this case, specifically, it is a unique asset that sits on a blockchain.
What is a blockchain you may ask? A blockchain is just another term for a database that has a different name because it stores data differently. I have an IT background so some of this is familiar to me and hopefully I’m not speeding through it. A database is basically information stored in tables and usually there are rows, you can delete them and you can add them and there are columns and you can now delete and add the same concept. The data is related by some key or something like that so that’s not really important to this conversation but that’s the standard. In a Blockchain data is stored in chunks /blocks and when that block is full it is that essentially chained to the former data that came before it and so that position that the data is stored at is unique. That’s really where the NFT rests – in some unique position on some chain of data in a database (the blockchain). The good or great things about NFT’s is they’ve created a standard for digital assets. If you are an entrepreneur and you have a website (a domain name) that’s your digital asset. So is the electronic ticket that you may have brought for an airline where you didn’t get a printed ticket or for a concert. Although they are all digital assets they are not represented the same. The NFT creates a standard where every digital asset that rests on the chain can be identified the same way even though it may contain totally different content. We can identify, we can determine who owned it when it was transferred on and all of that good gravy. I guess a good way to compare that to something is HTML code. It is a web language, it’s a web standard. Across the world wherever you go people know that language. They can communicate by creating programs no matter where they are from. I also thought and I do not know if this is a good example anymore as we changed the class but generally if you’ve got a laptop and it has a USB port right you plug in some accessory to it. They all are the same size. You can go to the store and buy a mouse or some other accessory that you want to plugin, they’re all going to fit into that port because that USB – Universal Serial Bus is a standard – so they are made the same way. So that is the good thing about it.
I think that is about enough of the technical jargon let’s get to why you would care.
I had a conversation today and it was very difficult for me to really quantify why as a consumer you would want to purchase a non-fungible token. I had to get to the base of it which is that art or beauty and desire to own something really relies on individuals making the purchase. My own point of coming to you tonight with this was more around not the consumer so much, but the creator the one who will provide something that so maybe interest to buy. I know that a lot of folks that follow me, folks I’m related to, friends, family are in a space where they create. They create art, they create music, they dance. This is a realm where artists can create something that is collectible and that they can really the market can determine the value. It is just another space where you can go ahead and get your craft or your items or whatever it is that you want to share out to the world and there’s a great opportunity for earning here. I just want to make sure that the folks that follow me or that tune in, understand what it is that is going on and don’t just blow by it because maybe you do not know what they are talking about or that this isn’t something that you would necessarily immediately buy. You may find that this is something that you want to be a part of. You may want to collect NFT’s. You may want to own them and be able to say I have ownership of that.
Now on to the important parts that I think about as far and with respect to creating ownership (as you know over here ownership is everything). If you’re an artist and you want to create an NFT you want to make sure that you own all of the underlying art that that token/ asset the NFT represents. I’ve been in a couple of rooms and listening to trainings because I like to learn as much as I can when new things are happening in the market that can impact my clients and future customers. I’ve heard some really cool applications of what you could do with an NFT. For example, there was one artist who said that he used it as a place for digital merchandising. Things like handwritten lyrics to songs, collectibles for tickets to entry to shows, snippets of songs with art to go with it. All of these different things really piqued my interest. I thought wow, there are so many uses for this. There are so many different ways that you can create art and mix it with music and dance. Obviously, with music, there are copyright rules. There are all types of things that go along with that but if you are a creator and own those rights there’s just so much you can do to increase your relations with your consumers. For your clients, your customers, and as we would call them in my business or your fans – the people who love what you produce this is more opportunity for them to now share in the work that you have to bring to the market. It think it is very important before you go out and create an NFT and put it out there in the market that you make sure that you own the rights to the song if it includes music or that if you get someone to create the digital art for you ie graphic art that you are going to create into this digital asset that you get a work for hire agreement. Make sure they own the rights to go ahead and put that out there and sell it. Or if you are going to put lyrics out there for sale, that you copyright your lyrics with registration. Those are all still applicable even though it’s a digital world and an asset that you can’t physically touch you still have to protect all of those rights. What you’re selling when you sell an NFT is that token, not the underlying information so before you (with anything I would say) bring it out to market make sure that you have the appropriate right to go ahead and put that out there.
I also want to share that with NFT’s the way that they work is with something called a smart contract. And a smart contract is not a contract. A smart contract is more like code that is assigned to that token or asset so that it tells it what it can do. Meaning it proves ownership, you can see who owned it, it if it’s been transferred or sold and a lot of times there are commissions involved. As an example, if I were to create an NFT of my scribbles (which hopefully you guys want it but I don’t know) I could forever be able (depending on how I set up that sale) to get a commission from the person who sells it. Every time it’s resold or transferred I can set up rules in the smart contract that say every time a sale occurs, I get some portion of the underlying sales as it goes forward. Also, if I creating may be accessories for a game – maybe shirts or guns or swords (whatever goes with gaming) I could say that will not just be one of them. There will be 50. When 50 are sold don’t sell anymore my item is limited. It is still unique because it will rest in its own position on the blockchain even though you can make multiples of that item.
Make sure that you’re covered with a written contract with anything that you do. If you get someone to help you create an NFT, if you get someone to help you set up your wallet, if you’re getting help to make sure that you know you’re getting the right type of deal or that you are getting commissions as the thing is transferred get a written contract. As it grows and grows in value make sure that you have written agreements as you go navigate through all of that. If you’re an artist specifically a music or recording artist you want to really investigate with legal counsel before or even now go back and look and see what you have signed. Does your label have rights to any production of you, your image, or anything that you do? Some of those deals are that deep. If you have not signed a deal and it is something that you are looking into try to exclude those rights. Try to make sure that you still own the right to do these kinds of things that can appeal to your fan base. S, look at those contracts and remember that a smart contract is not an actual contract it’s more about code and how the entity will function on the blockchain and how it’s transferred sold etc.
I did have one other thing I want to share and that is to be very careful if you get into this be careful about how you get them (NFT’s) created. You can go to opensea.io https://opensea.io/blog/guides/non-fungible-tokens/ and read the NFT Bible. It is a pretty good resource if you’re into technology and you really want to know you can go a little bit deeper for yourself and you can read through. That contains information on a resource that you can create your NFT for free. There are other sites out there and I am not affiliated with any of them but I just wanted to point that out because there are fees for creating NFT’s. They cost digital currency which translates to some value in money and sometimes there are fees to even sell them. You know we were hearing a lot about the million dollar cat and the $2 million Tweet but those are all anomalies – the outside occurrence. That is not what the average user is going to get from there from their digital asset so make sure that you think about how much is this going to cost me and what do I think I can sell it for because you do not want to come out at a loss.
For people who are creative, who really think in terms of changing the dimension of something and maybe mashing together and maybe creating something new like if that is what you do daily this is a great opportunity for you to take it to a new medium. I would hate for the technical jargon of the names of things to be a reason that you don’t participate in what is largely a boom. There is something happening here in the marketplace that I would like everyone to have the opportunity to enjoy and to capitalize on if they so choose and so hopefully this information is giving you, the fundamentals of what you need to get started and helps you to own your stuff. Thank you so much for joining. I really appreciate it. I hope that this was a help for you and that you can use this to your betterment
For everyone who was hurting today and struggling – I’m struggling myself. The TV and the news is tough, it’s difficult to deal with what you have going on in this country, and I just to say that you’re not alone and will work together until we can stop seeing what we are seeing every day and not expecting to be traumatized by those who are meant to protect us. Till then, I’m here with you and I thank you for joining.
A. Browne, Esq. © 2021 All rights reserved.