Dean Serroni from Merkle Tree Capital speaks with Gabriel Carey from Cadre Capital to challenge the myth that an NFT is “just a JPEG”.
Transcript
Gabriel Carey:
One of the words we’re hearing very frequently is NFTs another three letter acronym in the digital space. Many people are saying an NFT is just a JPEG, but if it’s just a JPEG, how could it possibly cost so much? Can you tell us a little bit more about NFTs?
Dean Serroni:
Thanks, Gabe. An NFT is the acronym for a non-fungible token. To get started, let’s quickly cover off fungible tokens to help us understand non-fungible tokens better. Like physical money, cryptocurrencies are fungible, meaning that they could be traded or exchange one for another. For example, one bitcoin is always equal in value to another bitcoin. Likewise, two half bitcoins is also equal in value and can be exchanged for one bitcoin. This fungibility characteristic makes cryptocurrency suitable as a medium of transaction in the digital economy. NFTs however, shift the crypto paradigm by making each token unique and irreplaceable, thereby making it impossible for one non-fungible token to be equal to another. They’re digital representations of assets that have been likened to digital passports because each token contains unique, nontransferable identity to distinguish it from other tokens.
Much of the current market for NFTs is centered around collectables, such as digital artwork like Bored Apes and CryptoPunks and sports cards like NBA Top Shots. However, NFTs can represent real-world items like physical artwork and real estate. By tokenizing these real-world tangible assets, buying, selling, and trading them becomes significantly more efficient and reduces the probability of fraud. It’s still really early days for NFTs and many of the biggest companies globally are exploring ways to utilize them in their business models, but one thing’s for sure, NFTs are here to stay and we expect them to become more mainstream in coming months and years.