You may have seen NFTs in the headlines this year – especially since some have sold for thousands or even millions of dollars.
What are NFTs? How do they work? If you buy one, is your money safe?
Read on for answers to some of your most frequently asked questions.
What are NFTs?
NFT stands for non-fungible token.
Fungible means interchangeable, like regular silver. For example, four quarters have the same value as a dollar bill.
Non-fungible means that someone is unique. Non-fungible tokens are digital assets that can be just about anything, including art, video, or music.
If you create something that you want to sell as an NFT, you ‘hit’ it by pushing it onto the blockchain.
What is blockchain? In the most basic of terms: this is a shared online registry. It is also the backbone of cryptocurrency.
“You can think of the chain as essentially being a huge spreadsheet like a Google document. What is in it or in the case, like Bitcoin, is the amount of money everyone has, ”said Matthew Stephenson – a behavioral economist.
Stephenson said the blockchain is a set of rules about how information is recorded and updated. These protocols, for example, prevent someone from simply giving themselves the equivalent of a billion dollars in cryptocurrency.
“If we want to share this great spreadsheet, then we can’t let anyone update it willy-nilly,” Stephenson said.
These principles also apply to NFTs on the blockchain. Blockchain technology is creating a scarcity for things that exist in the digital space, Stephenson said.
“It allows for that digital scarcity, which is sort of protected against forgery over time by the rules. You can get money through that, you can get collectibles from that, and you can get all the other beautiful things that we might like to be rare and unique, ”Stephenson said.
How North Texans Buy and Sell NFTs
Stephenson said he works with Dapper Labs, the company that partners with the NBA for Top Shot.
On NBA Top Shot, collectors can purchase videos of NBA highlights – known as “moments”. Collectors can buy the moments in packs or individually on the Marketplace.
Every moment has a serial number. Generally, the rarer the moment, the more precious it is.
They are basically digital collectible cards.
“It’s a moving image instead of a piece of cardboard, but it’s a collector’s item and there’s only one,” Cash Sirois said.
The North Texas sports radio personality also helped launch The Collectible Network, a streaming network dedicated to coverage of collectibles.
Sirois thinks the NFTs are here to stay.
“There were ticket stubs for Mavs games and now it’s all on your phone. We’re progressing in a digital world in everything, so it’s a natural progression in my mind, ”Sirois said.
Sirois said he started adding NFT Top Shots to his personal collection earlier this year and he’s not alone.
Dapper Labs said they started the year with 4,796 collectors on Top Shot. On April 23, he said the number had climbed to around 460,000 collectors.
How North Texas Institutions Are Adopting NFTs
The Dallas Weekly, a publication owned by black people in North Texas, ad it would hit future editions as NFT.
“We’ve had hedges, we’ve had spreads and these things are basically moments,” said Patrick Washington, CEO and editor.
“My job with Dallas Weekly has always been about imagining new products and new digital ways to deliver our information and stories to our audience and our community. When we started all kinds of discussions, we were there, ”said Jeremiah Long, Dallas Weekly product manager.
The publication plans to offer NFTs of some future editions with covers created by artists to support their work and the black press.
“It was really a tangible idea to do a commission and it’s another avenue of income for us,” said Jessica Washington, COO and CFO.
“It was a way for us to tap into our local artist market, especially those who I think deserve to be seen and heard and to be at this point to earn hundreds of thousands of dollars for their work. And we could help, ”said Patrick Washington.
“The purpose of the black press is to tell our stories that otherwise go unread. One of those stories is the presence of our creative side in the visual arts world, ”Washington added.
What else is possible?
“There really is no doubt in my mind that all of the digitization of society and assets is here to stay,” said Richard Raizes, partner at blockchain investment firm Plutus21.
The Dallas-based startup originated from SMU’s entrepreneurship incubator and focuses on blockchain infrastructure investments.
“The scarcity of something digital is definitely a theme that’s here to stay. Entrepreneurs and creators around the world are going to take this scarcity in digital form and they will create what we cannot even imagine today, ”said Hamiz Awan, founder of Plutus21.
Raizes and Awan said they believe more assets may be hit in the future. And these offers will one day pass the Internet as quickly as email.
“There is a generational change: the children who are born today, I don’t think they will ever use cash. I think they’re going to be natively used to the digital world. So for them the value of something digital is the same as something physical, ”Awan said.
Is your money safe?
NFTs are not regulated like your bank account. There are few protections.
Cathlin Tully, an attorney in the FTC’s Privacy and Identity Division, said she was particularly wary of any get-rich-quick promises with NFTs.
“We tend to see scams pop up in areas like this, especially in newer types of markets,” Tully said.
Tully said to treat any accounts or digital wallets containing your tokens as bank accounts. Protect your passwords, make sure passwords are tough and unique, and don’t reuse passwords for other accounts. Tully said if he was available, turn on multi-factor authentication.
Some NFT consumers tell NBC 5 responds that they have encountered other complications.
“I probably spent about a month investing a lot in it, both in terms of money and time. I would say that for two months I have been waiting to withdraw my money, ”said AG, who asked us not to use her last name in order to keep her account private.
AG told NBC 5 Responds that he spent around $ 10,000 to buy NFTs on Top Shot and made trades, but had to wait weeks to withdraw the money. He finally got it.
Dapper Labs shared this blog post with NBC 5 Responds, highlighting growing challenges as well as security and compliance checks. He said accounts must be created for at least 45 to 60 days before an account is eligible for withdrawal access – a policy to prevent credit card chargebacks by bad actors.
“They will indicate that this is a beta version. What I mean is if you can take my money, you should be able to give me my money, ”AG said.
All about the money?
During Dallas Weekly, we asked Jessica Washington how she would define a successful Dallas Weekly NFT.
“What makes our success as a newspaper is commitment. Are people really watching what we are talking about? Washington said.
“There is a lot of negativity out there,” said Jeremiah Long – who is also an artist. “The NFT community boosts positivity. They want to see you shine, they want to see your positive things, they want to see you say something happy, they want to see you compliment someone’s art.
Long’s advice to anyone interested in NFTs?
“A bad reason to support it is at Google,” What is the hottest piece of art? “and throw in your disposable income and then hope it turns into a million dollars,” Long said.
“If you’re a person who wants to see an artist that you really enjoy succeeding over time, that’s a great reason,” Long added.
For Cash Sirois, NFTs, like his other collectibles, provide competitive fun.
“Everyone loves a good chase,” Sirois said. “It reminds me of my childhood. It reminds me to go buy a pack of cards and hope for a Dwight Gooden and not get it. Then sometimes get it.
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