NFTs Explained

By June Ramli

Singapore, Nov 11: NFT or also known as a non-fungible token (NFT) is a unique and non-interchangeable unit of data stored on a digital ledger (blockchain).
NFTs can be associated with easily-reproducible items such as photos, videos, audio, and other types of digital files as unique items (analogous to a certificate of authenticity), and use blockchain technology to give the NFT a verified and public proof of ownership.
We recently spoke to Broctagon Fintech Group CEO and Co-founder Don Guo (pictured above) to find out more about this new form of digital asset.

Can you please explain in layman terms what an NFT is?

NFT stands for non-fungible token. Unlike tokens that are fungible (which means that they aren’t distinct from one another), each NFT has unique properties that are immutable. Some examples that have already appeared in the market are NFTs that are paintings, tickets, music, and digital artwork.

How is an NFT created?

Creating an NFT is a fairly straightforward process. While they can operate on different blockchains – some run on smart contracts on the Ethereum blockchain, some on the Binance Smart Chain – an appropriate wallet has to be set up to create NFTs. Next, you’ll have to choose an appropriate marketplace – the more popular ones are OpenSea, Rarible and SuperRare. After a marketplace has been selected, you can upload the selected file that you would like to “mint”. Minting is basically the process of publishing digital work on the specific blockchain network. After clicking the “create” button on OpenSea and going through the process of connecting your wallet and providing your digital signature to demonstrate your ownership, all you will have to do next is to add it to your collection.

Some legitimate marketplace to buy NFTs in South East Asia, particularly in Malaysia and Singapore.

As the NFT market continues to evolve, interests in this new digital asset class revolving around art, fashion, music, gaming continues to extend to a larger audience. In my opinion, I think that Asia will likely be the largest space for NFTs. Since technology and our lifestyle are becoming more intertwined every single day, the global development of NFTs will hold more truth in Asia as it leads in tech adoption. Popular NFT marketplaces in SEA are Mintable, FormosArt, Enjin Marketplace, and Pentas in Singapore and Malaysia.

What are some of the best ways to buy or pick an NFT?

There is not a “best” way to buy or pick a NFT, seeing that the objectives of the participants within a market are very diverse. A good place to start would be to identify your own personal goals for buying said NFT – are you acquiring it as an investment? To support the artist? Depending on your goals, the answer will differ. For instance, if meant as an investment, then you will need to appraise and see if that particular art piece is of good value. Like art, there are many ways to appraise NFTs – you may wish to consider; for instance the NFT’s grand concept, its technique, style, execution, artist etc. 

What are some of the red flags that one should look out for before purchasing an NFT?

A common misconception is that buying a NFT grants you the copyright to that particular image or artwork. The reality is that the NFT itself cannot help match the creator or owner with a real person in the physical world, much less help validate whether a person has such legal rights. It hence becomes of utmost importance for someone looking to get into NFTs to do their due diligence prior to purchase. Other than checking the cost of the NFT, there are other ways such as taking a look at the contract details and verifying them as well. 

There are a lot of TikTokers promoting NFTs these days on the platform. Are you aware of this and why do you think NFTs are super popular among millennials?

I think NFTs are a very fun and creative way for people to not only display their works but also as a means to make more money. Especially with marketplaces such as the NBA Top Shot, many people, be they millennials, fans of the game, or even investors, can collect such collectibles and call it their own. Several NBA icons have also hopped onto the trend and have created trading accounts. Similar to trading cards like Pokemon, this appeals to millennial in a very fun way, especially in the digital age. 

Can NFTs make you uber rich?

Absolutely, from the perspective of a buyer, NFTs have the potential to make you a millionaire but of course, with huge rewards comes huge risks. This is especially true, if one does not have the expertise or knowledge in NFTs – it can be difficult to know what projects to put your money in. After all, NFTs are a type of investment so I think it’s important to understand the market and conduct proper research before diving into NFTs as a money-making tool. 

Can artists (freelancers) turn their artwork into NFTs? If yes, how do they go about doing this?

Yes, freelance artists can turn their artwork into NFTs themselves. Using Rarible, a marketplace for NFTs as an example, artists are able to connect to a wallet such as MetaMask on Rarible. Afterwards, they can upload single or multiple collectibles and fill in the details for the collection such as the description, the amount of royalties the artist would like to distribute when it resells and its other properties. 

Are NFTs the new stock market?

NFTs are not as widely traded as the stock market and since the general public is not fully aware of its existence yet, it will take some time for the marketplace to evolve and become as commonly talked about as stocks. However, NFT sales have shown explosive growth to US$10.7 billion in Q3, eight times more from its previous quarter – so it might not take that long before NFTs become mainstream.

How do you purchase and NFTs and how do you go about selling it once the price has gone up?

There are many marketplaces for NFTs. One of the more popular options would be OpenSea where there are various NFTs to choose from based on category. Once you have deemed it valuable enough to be sold, you can sell the NFT at a fixed price or start an auction. There are many other settings as well, such as the starting price, price threshold, and so on. After all the details have been finalised, the NFT can be put up for listing.

Editors’ Note: Do check back tomorrow for the second part of this interview where we explore more about bitcoin and cryptocurrency in Malaysia.