1. So what is an NFT, anyway?
In essence, an NFT, or non-fungible token, is just a record that someone owns something. That record lives on the Ethereum blockchain—an ongoing, impossible-to-fake public ledger that shows everyone who’s ever owned the thing in question. (So even if someone can copy and paste your cartoon of an ape, the real one—the only real one—is clearly and incontrovertibly yours.) Of course, NFTs aren’t just small artworks—they can serve as contracts or tickets to events or memberships in clubs. And, in some cases, they’re shockingly valuable: It’s not unheard of for certain NFTs to run to six figures. And, uh, people spent around $20 billion buying and selling these things last year. But that’s getting ahead of ourselves. What NFTs are, fundamentally, is that record of ownership—the thing that’s owned is almost secondary. —Duncan Cooper
2. Got it. But why do they matter, again?
Some people who are bullish on NFTs think that this sort of radical transparency can save art, liberate the internet, and restore democracy. Others think NFTs will accelerate societal collapse through grift and greed—and melt the polar ice caps thanks to the insane energy demands required to store all the data required to keep the blockchain running.
That’s a pretty wide range of outcomes: total triumph or total disaster. How terrifying! How fun! Predicting what comes next in a space that moves as fast as NFTs is a futile exercise, but it’s hard to imagine that all of this energy adds up to nothing. —D.C.
3. Okay, so what’s the history of NFTs?
One-of-one blockchain-based collectibles emerged years ahead of the recent NFT boom in the form of Rare Pepes. Set up on the Bitcoin blockchain in 2016, these memes—which unfortunately feature the same sad frog character that became a white nationalist symbol around the same time—are virtual trading cards of varying rarity that reference strange, meme-y inside jokes.
Rare Pepes appealed to a very niche audience—digital-art and blockchain nerds—but they set a precedent for blockchain-based collectibles like the now wildly popular CryptoPunks, which in turn inspired CryptoKitties, another Ethereum-based collectible set with a gamified twist: Owners could “breed” their kitties to spawn even rarer new ones with specialized traits (like fur color). Buyers’ enthusiasm for CryptoKitties generated enough activity to slow down transactions on the Ethereum blockchain in December 2017, demonstrating that blockchains could be used for fun, not just finance. Most importantly, one of the creators of CryptoKitties also cemented a token standard called ERC-721. Simply put: It’s the set of rules that allows true digital ownership, and is responsible for the exchange of billions of dollars—and millions of ether (ETH), Ethereum’s currency—for colorful JPEGs. —Jessica Klein
Some Basic Terms and Acronyms You Should Know
As if the tech underlying NFTs weren’t impenetrable enough, fans and collectors seem to speak a language all their own. Here are a few terms to get you started. —J.K.
GM: Good Morning, a standard greeting NFT enthusiasts have turned into insider code.
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 trance 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. —D.C.
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.
Profile pictures—PFPs—are a different way to think about how value is accruing. It used to be, fans of a certain Disney movie would buy memorabilia, but it was this big, top-down corporation that set the culture, and you were just the consumer. With PFPs, consumers can own the I.P., so they’re owning the upside of that piece of culture. In my belief, the next Disney is going to be created from the ground up, with individual holders of the I.P. being the biggest champions, because they’ll have more of a vested interest in the success of the project. That’s a really unique flipping of ownership.
5. What are blue-chip NFTs?
Blue chips are the NFTs with the best chance of staying power: the projects with the biggest war chests and most plausible plans to grow and grow and grow. And right now the market leader is indisputably Yuga Labs.
In its first year, Yuga Labs’ marquee collection, Bored Ape Yacht Club (BAYC), yanked the mantle of best-selling PFP from CryptoPunks—then Bored Ape bought up CryptoPunks’ I.P. One of the reasons people gravitate to BAYC is because it grants various rights to holders: A BAYC owner can monetize their NFT’s likeness, which allows for odd spin-off projects like a Universal Music–signed band fronted by apes.
Today, Yuga’s NFTs have accounted for as much as 40 percent of the NFT trading volume. The company receives royalties from every sale, and it’s also branching out. It dropped a merch line, available only to NFT holders. It helped to set up ApeCoin, a publicly tradeable cryptocurrency that it gave to its holders for free, which almost instantly hit a fully diluted market cap estimated to be $10 billion.
It’s small wonder that BAYC inspires such loyalty from NFT holders, whether they’re the lucky nerds who minted in April 2021 for around $200 each or celebrities who bought in at six figures. Is BAYC’s domination of the marketplace good for anybody else? Well, at least the next NFT David has a clear Goliath to take aim at. —D.C.
6. Who are some of those potential challengers—those Davids—to Yuga’s Goliath?
New contenders for “the next BAYC” pop up all the time, but if one thing stays the same about blue-chip NFT collections, it’s this transmedia mindset: events, merch, spin-offs. When Cool Cats signed with CAA, one of its creators promised: “It’s going to be more of an experience, rather than just a JPEG.” Azuki’s website promises “exclusive streetwear collabs” in its digital universe. RTFKT, which makes virtual sneakers and metaverse avatars, was acquired by Nike. If an NFT brand’s I.P. is good enough to sell hoodies, the thinking goes, it might be worthy of the budget for a Netflix project too. —D.C.
7. Can you split the cost of an NFT with someone else?
You can. The term for that, fractionalization, is a way of getting exposure to a big-ticket item without having to buy the whole thing yourself. The owner of a specific NFT can issue any number of fungible tokens for it, letting other people buy and sell fractions of ownership. It’s not too different from buying stock in a company, or Green Bay Packers fans’ owning shares of the team—except now people can easily fractionalize anything. Basically, you’re doing it to either (1) make money by investing or (2) because you love the Packers—er, NFT art. Or maybe it’s a little of both. Alternatively, if an NFT is listed for regular-old sale, a group of collectors can use a platform like PartyBid to pool their ETH and buy it as a group, each of them receiving a proportional share of fungible tokens. —D.C.
SECTION 2: So You Want to Buy an NFT
8. How permanent are NFTs, really?
They’re here as long as the blockchain exists, since there’s no way to delete an NFT once it’s on the blockchain. But you can dispose of an NFT by “burning” it, which means sending it to a particular wallet—called the null or burn address—where it will be permanently irretrievable.
Burning an NFT is sometimes done out of buyer’s remorse. And some NFT creators actively encourage owners to burn their NFTs, which takes them out of circulation, in exchange for something else. For example, collectors of a set of rocket ship components from the Tom Sachs Rocket Factory can burn them in order to “build” a complete rocket. Then they can receive a physical version in the mail. —D.C.
9. So how do I buy an NFT?
Getting your hands on an NFT isn’t exactly simple, but it doesn’t have to be terribly complicated either. Here’s how to grab your first, in five easy steps. —J.K.
1. Set up a MetaMask wallet. MetaMask makes one of the O.G. digital wallets, which is where you’ll store your NFTs. It’s a popular choice because it works across NFT marketplaces and is easy to install in your browser. MetaMask will generate your “secret recovery phrase,” 12 words that act as the private key to your wallet. Write those down—like, on real paper—and hide them somewhere, like in a safe, or use a secure password manager. Don’t show them to anyone else and don’t lose them. If you do, you’ll lose access to your wallet.
2. Buy some ether. Head to a crypto exchange like Coinbase, connect your bank account, and use some good old-fashioned fiat to buy cryptocurrency. Most NFTs are tokens on the Ethereum blockchain, so load up on that chain’s currency, ether (ETH). NFT prices range from practically free to in the millions, so fill your wallet with whatever amount you feel comfortable losing if your NFT’s value tanks.
3. Join Discord. Discord is where the NFT chatter happens. Specific communities cater to different interests and can help you figure out which NFTs are dropping, which projects are scams, and which ones might just make you a pile of ETH…or at least make for a killer Twitter profile pic.
4. Visit an NFT marketplace. OpenSea, the biggest and most varied marketplace, aggregates NFTs from all over the web—meaning you can find just about anything there (including an NFT of the word “porn,” which has been listed for as much as $15,000). Other marketplaces have their own areas of expertise: Nifty Gateway caters to streetwear fans with drops, and KnownOrigin and Snark.art are better for fine art.
5. Buy your NFT. Platforms like OpenSea let sellers list prices or hold auctions, and buyers can make offers. It’s exactly as simple as clicking the Buy Now or Place Bid button—just like you’re purchasing a pair of pants online. Unlike buying pants, blockchain transactions charge for “gas,” or the cost of energy it takes to run them—so be prepared to spend a little more than the NFT’s price. And just like that, you now own a little piece of the blockchain.
A Brief Taxonomy of NFT Collectors
Quick flipper: You’re someone who’s extremely online and always early, surfing the waves of other people’s FOMO, minting anything that’s hard to get, then selling it to stragglers who pay extra to join in.
Art respecter: A patron of the digital arts, you’ll sell for millions someday, or you won’t. If it all goes to zero, you can still admire the art in your wallet, proof it was all real once.
Investor: With a V.C. mindset, you leverage industry connections to make big bets on the most professional-seeming NFTs, hoping one or two become household names.
Normal: You eat healthy, go outside, and at some point might spend $200 on an NFT your cousin made, never to think about it again. But your cousin will love you forever.
10. I feel like I’m coming in late. How can I stay in the know?
You’re not that late! The whole world is just starting to spin. Besides an infinite supply of ETH, the next best thing for an NFT trader is to seek out a reliable stream of actionable info—what real heads call “alpha.” The best stuff is often shared in private Telegram groups, where whales—an old borrowed stock-trading term referring to those wealthy enough to single-handedly sway the market—discuss whale stuff.
Some traders pay to join gated alpha groups on Discord, like MVHQ or Origins, which promise endless discussions, raffles for mint spots, and access to trading tools. There are plenty of free tools too: WhatsMinting surfaces trending NFT mints. And Context is like an Instagram feed of other people’s wallets. Great for lurking. —D.C.
11. Just out of curiosity, can I make my own NFT?
Few succeed, but it’s not hard to try: The Zombie Zoo collection was drawn by an eight-year-old in Japan in 2021. Why can’t that be you? PFP artists can use Photoshop or Procreate to design their characters’ traits—alien skin and cowboy hats and whatnot—then generate the final art with a no-coding-required tool like Bueno. For fine artists, marketplaces like Zora let you mint and sell individual images, videos, audio, and text. Depending on your goals, you might want to hire a developer to write your smart contract—and maybe hire a community manager so someone else can get yelled at online instead of you, should shit hit the fan. —D.C.
12. How do I protect my NFTs from getting stolen?
Billions of dollars have flooded into the NFT industry, attracting scammers like moths to a flame. Here are some common scams to watch out for. —J.K.
The rug pull: A buzzy NFT project debuts, perhaps with a celebrity endorsement from the likes of a Paul brother. The price of the NFT or associated crypto coin rises…only to drop dramatically after the projects’ founders cash in their gains from the early pump, leaving the remaining holders with a pile of worthless digital goods.
The false mint: Most NFT projects derive value from scarcity. Popular, sold-out collections like Bored Ape Yacht Club have inspired scammers to tweet calls to mint brand-new Bored Apes…that don’t exist. Clicking the link to mint, rather, lets the scammers steal right from their victims’ wallets.
The plagiarized collection: Yes, NFTs are supposed to verify a digital work’s authenticity, but anyone can turn a JPEG into an NFT, even if they didn’t create the work. Watch out for collections that resemble popular NFT projects but aren’t listed by verified creators or are reverse images of well-known collections.
13. Anything else I can do on a personal level to avoid getting scammed?
Use burners. Spread your NFTs across multiple wallets, so if you compromise one wallet you don’t lose everything.
Read smart contracts. Don’t accidentally agree to send someone $20 plus your Bored Ape for free.
Get a hardware wallet. These require pressing physical buttons or touchscreens in order to move NFTs around, which thwarts most virtual attacks.
Ignore spam. Ignore DMs and weird NFTs strangers send to your wallet, both of which can have malicious contracts attached.
Flex carefully. Using an expensive PFP can make you a target for social engineering, especially if your account is doxxed. —D.C.
14. That sounds wild. Just how weird can NFTs get?
In 2018, artist Kevin Abosch—already a big deal in the traditional art world for selling a portrait of a potato for more than $1 million—decided to try something a little strange: He used his own blood to turn himself into a blockchain collectible through a project appropriately called IAMA Coin. We’ll let him explain. —J.K.
“It was a playful response to being commodified as an artist. Attention had shifted from the artistic value of my work to the monetary value, which is not ideal. I thought if I was going to be treated as a commodity, I would tokenize myself in the form of 10 million works of art, each one an ERC-20 token on the Ethereum blockchain.
“As a companion to that virtual artwork, I made some physical artworks with my own blood. (My wife is a doctor, and she just drew some.) I used the address that is generated when you deploy a contract to the blockchain and made a rubber stamp to make these works on paper. I felt that I had satisfactorily put myself on the blockchain.” —Kevin Abosch
SECTION 3: Are NFTs the Future of Art—Or Anything Else?
15. So I bought my first NFT. How do I display this thing?
While your NFT lives on your computer, a few products bridge the gap between digital art and physical display. Canvia’s frames use proprietary tech to make your digital art look like a print or painting, and Infinite Objects lets you buy your NFT already framed for as little as $120. Lago’s new $9,000 NFT frame already promises to be a status symbol: It looks like a TV and responds to voice commands. —J.K.
16. Are NFTs really art?
Noah Davis runs the NFT auctions at Christie’s in New York, where he has shepherded headline-making sales from Beeple, FEWOCiOUS, and Justin Aversano. He’s also the artist behind Howlerz, a less-highbrow NFT collection of cartoon wolves. —D.C.
“I’ve been in the art auction world for more than a decade now, and I got to sell that Beeple NFT for $69 million. I stuck around because I believe in all the promises of decentralization, and that it can give so much more equity to artists.
“There are hardly any objective truths out there, and ‘What is art?’ is definitely not one of them. I don’t get the same kind of feeling looking at CryptoPunks and a Rothko picture, but they’re both just as worthy of being called art. You go to museums and galleries to feel inspired and have holy communion with that vision of the artist. With PFPs, you’re not dealing with spirituality—you’re dealing with hedonism and having fun.
“That’s what I was tapping into when I was creating Howlerz. It was also my way of proving that everything I’d been saying about NFTs was true. I didn’t need a boss. I didn’t need a gallery. I got to draw the things that make me happy.” —Noah Davis
17. So how do artists feel about this?
It’s very clear that the NFTspace, for better or for worse, is the Wild West of incredible scams and forgeries. But there are also very interesting new structures that are attempting to redistribute ownership and create fairer models. David Rudnick is a graphic designer who is now making his name as one of the NFT space’s most ambitious artists. His Tomb Series is a collection of 177 artworks as screen prints, a book, and NFTs, combining auctions with crazy mechanics, interactive installations around the globe, and collaborations with musicians. It’s one big experiment in on-chain art. —D.C.
“I know the focus in the NFT space right now is on stuff that is super buzzy. Projects make staggering sums overnight, then crash and burn. But those are just classic early days, gold-rush scams. What’s genuinely new are the mechanisms available to an artist at the contract level.
“The body of work I put on-chain with the NFT publisher Folia last year, Exodus II, is a series of poems. It has a very simple mechanism: Nineteen poems unlock sequentially over a period of 40 years. If I were to die tomorrow, there’s nothing that would interrupt the dissemination and distribution of these works, because it’s on-chain and automated.
“There can be parameters of time, of permission, of audience engagement—smart contracts expand the gamut of what artists can do. You’ll see bodies of work on-chain capable of unfolding over lifetimes and beyond. You’ll see works in which agency is distributed outside the artist creator themselves. Viewers can be allowed to do more, or viewers can be denied. New experiences can be created, with new formats and possibilities for encounters.
“Tomb Series, my latest project, launches in a book and on-chain. Collectors shouldn’t have to see these systems competing for the future of art. Artists have the agency right now to utilize both, to create new physical results. It’s not as simple or as straightforward as just being on the internet.” —David Rudnick
18. What’s up with fashion NFTs?
Lots of established fashion brands have dabbled in NFTs: Nike, Adidas, Gucci, Louis Vuitton, streetwear brand The Hundreds, and the watchmaker Jacob & Co, to name just a handful. There are digital-forward fashion houses like Auroboros, which launched its own private community at a virtual concert by Grimes. Really, the business model is not so different from normal: Companies known for selling limited-edition luxury goods continue to do exactly that, usually with small drops that have very high prices.
A few fashion projects take a different approach, though. For example, Hibiscus DAO, co-created by the designer Jeremy Karl, is pioneering a system of “fashion Legos” based on NFTs’ ability to share royalties with creators and show a clear line of provenance. The idea is to make real-world garment production more equitable. They’ll track the supply chain on the blockchain, using NFTs for everything from open-source embroidery files to purchase orders that demonstrate “proof of non-slave labor.” —D.C.
19. What about music NFTs?
Music is often at the forefront of tech. David Greenstein is the cofounder of Sound.xyz, a curated platform where artists like Snoop Dogg and LATASHÁ sell limited editions of their songs as NFTs. —D.C.
“Spotify is the greatest consumer product of all time. But one of the downsides is that artists have been forced to get tens of millions of streams to make a full-time living off their music. As an example, with Sound, first we did 25 NFTs associated with a song for 0.1 ETH. We got around $10,000 when our Sound drops started to sell out, and if you did 10 songs a year, that’d be close to $100,000, with far fewer backers. Anybody can listen to the song for free, and there’s no advertising. None of this is about the cash grab. It’s about supporting artists directly through their art, letting people value music how they want, and building community. The whole point of music NFTs is to experiment with your music in new ways. In this industry, we always accept one business model and change it in 10 years when it stops working, from cassettes to CDs to downloads to streaming.” —David Greenstein
20. Most importantly, can NFTs really help save the environment?
Conversations about the environmental costs of the Ethereum blockchain usually end with promises that, later this year, the technology will change to consume less energy. Is that enough? Terra0 is a group of artists known for its concept of the self-owned forest, which would use smart contracts to aid regenerative wilderness and other eco-minded NFT experiments. —D.C.
Paul Seidler (cofounder): When we started in 2015, it was quite a different time for crypto. People had all these cybernetic dreams. We were interested in how to represent individual organisms on the chain: trees, flowers, plants.
Paul Kolling (cofounder): Prenma Daemon was the first project we exhibited in a traditional art institution. We had this bonsai tree, and everything it needed—water, pruning, the electricity to provide light—was in a smart contract and could only be provided if the plant paid for its services. For that, the audience had to tip it. It created this real-life community Tamagotchi situation, where people would have to care for it or it would die. It wasn’t only one person, but anybody who engaged with it: I see there’s a need for this. I can solve this. Do I do it?
Seidler: We don’t have a universal system that solves all problems, but through art we can point to the problems and provide prototypes to look at them in different ways.
21. Or maybe even the world?
Nadya Tolokonnikova, part of the Russian feminist art collective Pussy Riot, spent time in prison for staging a protest against Vladimir Putin in 2012. Knowing firsthand the power of authoritarian governments, she identified NFTs as a tool for activism early last year, after raising 178 ETH—more than half a million U.S. dollars today—by selling NFTs of the group’s “Panic Attack” video, and donating a portion to support domestic violence survivors in Russia.
“It’s a good economic tool for [those] whose bank accounts are frozen,” Tolokonnikova tells GQ–a big problem in Russia now, as residents who seek to donate to Ukraine face losing access to their funds and risk jail time.
So she helped form UkraineDAO and raised around $7 million “in just a few days” by selling an NFT of the Ukrainian flag. Thanks to crypto, the funds could go directly to its beneficiaries: the Ukrainian government and charitable organizations on the ground in Ukraine. “With crypto, we didn’t have to face any bureaucracy,” Tolokonnikova says. “We gathered this money…and people can use it immediately.”
Tolokonnikova has since formed a new project, UnicornDAO, dedicated to raising the “floor price” of female, nonbinary, and LGBTQ+ artists making NFTs. It’s spent more than $1 million on their work so far. “For the most part, [crypto] is still a boys’ club,” she says. “We are here to guide efforts to make [the industry] more equitable.” —J.K.
22. Okay, but knowing all of this now, what if I hate it? Is that okay? Will I die of FOMO?
If this all sounds stupid, honestly, you can probably just avoid it. Money-making fads come and go: pyramid schemes in the ’90s, investing in the dot-com bubble, day traders who quit their nine-to-fives in the early 2000s. Put another way, the total number of Ethereum wallets holding NFTs last year was only about 3 million—not exactly everyone you know. Some people will transform their hobbies, their careers, their lives. A lot of other people will give it a look, have a taste, and get out after making or losing a little money and adding some cool-looking JPEGs to their wallets. Remember, a few people founded Amazon and PayPal. A lot of other people lost some bucks on Pets.com. It’s not so much that it’s up to you which one you want to be—it’s up to you whether you want to mess around with being either of them at all. —D.C.
A version of this story originally appeared in the June/July 2022 issue with the title “GQ’s NFT FAQ.”
IMAGE CREDITS:
Gary Vaynerchuk: Brian Gove. Grimes (first use): Taylor Hill/WireImage. Beeple: Jason Bollenbacher. Mona Lisa: Kenzo Tribouillard. Grimes (second use): Frazer Harrison. Snoop Dogg: JC Olivera. Nadya Tolokonnikova: Chris Saucedo. All: Getty Images. Tom Sachs: Rocket Factory x Tiffany & Co.; courtesy of Tiffany & Co. (3). Bored Ape Yacht Club: courtesy of Yuga Labs (3). Rare Pepe: courtesy of MrHansel (3). DJ Pepe: courtesy of Rare Scrilla. CryptoKitties (4), Azuki, Jacob & Co Watch NFT: courtesy of brands. Mfers (2), Blitmap (3), Tubby Cats, Howlerz (2), Grifters, shields (2), raccoons: CC0. All other collage elements: Getty Images.