What Is an NFT? And 21 Other Urgent Questions About Non-Fungible Tokens

Written by moushouar

WAGMI: We’re All Gonna Make It, shorthand for the optimism—sometimes merited, sometimes delusional—around NFT projects.

NGMI: Not Gonna Make It. An insult reserved for inept investors, rip-off projects, and NFT haters generally.

DIAMOND HANDS: The ability to hold onto NFTs for the long haul. If you can wait out early losses in hopes of a big payday, you’ve got diamond hands.

PAPER HANDS: The opposite of diamond hands: Someone who bails out and sells early.

PFP: Picture for Profile, used to refer to a collection of NFT-linked images designed to work as Twitter avatars. (See CryptoPunks, Bored Ape.)

DYOR: Do Your Own Research. Because Web3’s self-sovereignty ethos means there’s no safety net if you make a mistake, collectors are on their own when it comes to avoiding scams and finding the most promising projects.

MINT: The act of transforming a digital asset—a JPEG of a penguin wearing a hat, a trans song, etc.—into an NFT.

DAO: Decentralized Autonomous Organization. Basically, a club but with no central leadership. Members typically pool their crypto and make decisions on what to do with their funds, together.

CC0: A type of license that waives copyright and puts an NFT’s art in the public domain.

4. What makes an NFT valuable?

Think of an NFT like any collectible: deadstock Jordans, Pokémon cards, taxidermy. Certain items are simply more scarce, which imparts value. To learn more, we tapped Kevin Rose, a tech entrepreneur, podcast host, and the cofounder of Proof Collective, a private community of NFT collectors where membership passes have traded for around 100 ETH apiece, and Moonbirds, instantly one of the best-selling PFP collections of 2022. —DC

GQ: First off, why did you get into NFTs?

Kevin Rose: It was 2017, and it was just a project called CryptoPunks. My friend said, “Here are these cute 8-bit characters that you can collect on the blockchain. We can trade them.” I bought 10. I think I paid $5 or $8 each, then forgot about it.

After a while, there started to be more movement, so I popped my head back in. The NFT standard had been [widely established]. Marketplaces could exist. And there were all of these native digital artists who were only producing work on the blockchain. I said, Okay.… So there’s proven scarcity, and it’s all on-chain in a transparent fashion. There’s durability, so it’s not going to degrade in quality over time. I can transfer it easily. And there’s a 24/7 market for liquidity [i.e., converting crypto to real cash]. There’s so much emphasis on crazy NFT prices now, and that’s not sustainable. But I know that NFTs are 100 percent here to stay because it’s just better tech.

What makes a specific NFT valuable? I don’t think it’s fair to put all NFTs in the same bucket. If I’m buying a one-of-one from XCOPY for $800,000, it’s because I know that XCOPY is the Banksy of the NFT generation. He’s like any great artist, but I can’t collect his work any other way, because he has a very unique, animated style that cannot be reproduced in a non-digital form.

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