Family, in the past two years, you must have come across news like this: Curry spent hundreds of thousands of dollars to buy a 'bored monkey' as his avatar; Jay Chou's 'bear' was stolen, resulting in heavy losses; an electronic painting was auctioned at Christie's for a sky-high price of 400 million RMB...
Many people were confused at the time: 'Isn't this just a JPG image? Can't I just right-click and save it? Why is it so expensive?'
In fact, what everyone is mocking as 'images' is just the surface.
Today, let's take a look at this NFT that has driven countless people crazy and caused many to go bankrupt. What exactly is it?
1 What is NFT? (Giving data an 'identity card')
NFT stands for Non-Fungible Token. Translated, it means: non-fungible token.
This term is too convoluted; let's break it down:
Fungible: Just like the 100 yuan bill in your hand. Your one and the one I withdrew from the bank, though numbered differently, have exactly the same value and can be exchanged freely; this is called 'fungibility.' Bitcoin and Ethereum are also like this: I have 1 coin, you have 1 coin, and there's no difference between us.
Non-fungible: Just like a property certificate or the genuine Mona Lisa. Each one is different and cannot be exchanged. If you offer your 100 square meter property certificate in exchange for my 100 square meter one, I will definitely refuse (the location and floor are different). This is called 'non-fungibility.'
So, what exactly is NFT? It’s not the image itself; it’s a 'digital contract' (or digital property certificate) on the blockchain.
Common misconceptions correction: The monkey image you 'right-click saved' is just a photo of the house. The person who spent 1 million holds the property certificate. In the Web3 world, only those holding the property certificate (NFT) are the true asset owners.
2 NFT Evolution: From 'Pixel Points' to Metaverse
NFT did not pop up overnight; its rise is essentially a history of internet evolution and showing off.
First phase: Ancient beginnings (Dyeing Bitcoin) As early as 2012, geeks wanted to do something with Bitcoin. They tried to mark Bitcoin (colored coins) to represent that you are the owner of a certain asset. At that time, it was still very rudimentary, belonging to 'ancient civilization.'
Second phase: The ancestor of avatars (CryptoPunks). In 2017, CryptoPunks appeared on Ethereum. 10,000 24x24 pixel monster avatars. At that time, they were free to claim! Now? The cheapest costs hundreds of thousands. It is the 'antique' of the NFT world, and owning one means having the identity of 'old money' in this circle.
Third phase: Network congestion (CryptoKitties). Still in 2017, a game called **'CryptoKitties'** became popular. People raised cats on the blockchain and bred them to have kittens. Because too many people played, it directly congested the Ethereum network. This made everyone realize for the first time: blockchain can not only trade coins but also play games!
Fourth phase: Wealth creation myth (Bored Ape & Beeple). 2021 was the first year of NFTs. A painting by artist Beeple was sold for $69 million, shocking the traditional art world. Soon after, the Bored Ape (BAYC) burst onto the scene. It's not just an avatar; it’s a **'ticket to the rich club.'** When you buy the ape, you own its commercial rights and can attend offline millionaire parties.
Fifth phase: New narrative (Bitcoin NFT & Points War). By 2023, people felt Ethereum was too expensive and returned to playing on the Bitcoin network. There is a protocol called Ordinals that allows images to be directly engraved on the smallest unit of Bitcoin (Satoshi). It’s like engraving words on a gold bar, claiming it will never disappear. Meanwhile, the trading platform Blur turned the NFT market into a high-frequency trading casino through airdropped points.
3 What is the actual use of NFTs? (Not just speculation)
Setting aside the price bubble, NFTs, as a technology, are actually very useful:
The artist's meal ticket: Previously, painters sold paintings, and no matter how much the painting appreciated after being sold, it had nothing to do with the painter. With NFTs, through smart contracts, every time a painting changes hands, the artist can automatically receive a royalty (for example, 5%). This is fantastic!
Web3’s 'Hermès' (PFP): How to show off wealth online? Show a luxury car? That image might be stolen. But in Web3, when you change your avatar to an NFT worth 1 million, others can click to check and know it’s real. This is a form of social capital that represents your circle.
You own game items (GameFi): Previously, when playing online games, the dragon-slaying sword you bought with money belonged to Tencent/Netease. If the operator shuts down the server, your sword disappears. But in chain games, the dragon-slaying sword is an NFT. It truly belongs to you, and you can sell it for real money or even take it to another game that supports that standard.
Brand membership cards: Starbucks, Nike, and Adidas are issuing NFTs. It’s like a super membership card; holding it can get you limited edition sneakers, free coffee, and even sell it to others.
4 Don't be impulsive! There are pitfalls everywhere.
Feeling itchy to buy one? Let's pour a bucket of cold water on it. The current NFT market is extremely risky!
1. Liquidity depletion (valuable but no market): This is the biggest pitfall. Tokens can be sold at any time like stocks. NFTs are like houses. When the market is bad, even if you lower the price, no one will buy. Many people's NFTs eventually become unsellable 'electronic waste.'
2. The images here will 'disappear.' Although NFTs are on the blockchain, many NFT images actually exist on centralized servers. If the project team goes rogue and the server shuts down, that expensive NFT in your hands might turn into a blank image or a 404 error. (This is also why everyone now advocates for decentralized storage like IPFS or Arweave.)
3. Copyright dilemma: Buying an NFT does not mean you own its copyright. Some projects (like CC0 agreements) state: the copyright is public, and anyone can use it. Other projects say: the copyright belongs to you, and you can print it on clothing to sell. Make sure to understand clearly before buying, so you don't accidentally infringe on rights.
4. Soul-bound tokens (SBT) By the way, Vitalik (the founder of Ethereum) later proposed the concept of SBT. This type of NFT cannot be transferred or sold. It's like your university diploma or credit report. It is bound to your address to prove 'who you are' rather than for speculation.
To summarize:
NFTs have gone through a crazy bubble and are now returning to rationality.
It’s not a scam; it’s a technological tool. For the first time in the digital world, it has realized **'verification of rights.'**
In the future, your property certificate, concert ticket, insurance contract, and diploma may all become NFTs. Removing the bubbles leaves the true transformation of Web3.
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Disclaimer: The content of this article is aimed at sharing business economic models and disseminating knowledge, and is not intended to provide any specific advice. The author does not participate, invest, operate, recommend, share, or privately analyze any projects. We strongly advise you to conduct independent research and analysis and make informed decisions based on your personal situation before making any decisions.
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