Week 2: What is an NFT?

Enter post about CryptoPunks or Bored Ape Yacht Club NFTs being bought for $300 and being sold for six figures. Do you feel the FOMO yet?

As any curious person (or degenerate) does, I go to Google. “What is an NFT”. Enter.

An NFT is a Non-Fungible Token.

What does “fungible” mean?

“The ability to be replaced”.

Ok…what does that mean?

Non-fungible must mean not being able to be replaced, sort of like a 1/1 art piece that lives on the blockchain? While a $100 bill is seemingly identical to another $100 bill and 1 bitcoin is identical to another bitcoin, one Picasso does not necessarily equal the value of another Picasso.

Opensea is the main secondary marketplace for NFTs, similar to how the the stock market is the marketplace for secondary equity sales. Two things stand out immediately:

1. the different types of transactions (sales vs. offers vs. auctions), and

2. the different colored ethereum logos.

  • Sales where the seller sets a fixed price (ie. new Apple computer costs $2000, so I pay Apple $2000) are shown under the “Buy Now” filter. In this type of transaction, the buyer meets the seller’s price in [black] Ethereum and, therefore, initiates the transaction and has to pay the gas fee.

  • Sales where the buyer makes an offer to the seller and the seller accepts are completed using the pink Ethereum, also known as Wrapped Ethereum (WETH). WETH is just Ethereum “wrapped” in a smart contract, which is a program that knows to custody the transaction if the seller agrees to the terms by signing with his/her private key. Converting from ETH to WETH can be done in your wallet for a small gas fee. The accepted offer is initiated by the seller in this case, so the seller pays the gas fee for this type of transaction.

  • Auctions are time-based English-auction-styled transactions (ie. highest bid when time expires, think eBay) that can be filtered under the “Auctions” filter. Because potential buyers must bid Ether for some point in the future, WETH is used to bid on an item. Opensea pays the gas fees for auction transactions.

You may be wondering about the purple Ethereum icon as it wasn’t covered in the different transaction types. The purple Ethereum is the Polygon sidechain. Polygon offers much lower fees to transact on its blockchain.

**Be cautious of popular NFTs that seem way too cheap on the Polygon network as it may be a copy of artwork sold on the Ethereum blockchain that costs the seller almost nothing to post.

Now that I have a grasp of Opensea, I come across some of the more popular projects like Cool Cats, Doodles, CyberKongz along with a lot of recently released ape projects like Fat Apes, Desperate Apewives, Strong Apes, Angry Apes United... you get the point. With all of these successful ape projects, it can’t be that hard to make money in this space.

Best to try to absorb the culture and the content first before making any decisions. Let’s jump onto each project’s Discord to learn more.