Lecture 2 - NFTs

WHAT ARE NFTS?
ONE OF THE MOST POPULAR DIGITAL ASSETS OF THE YEAR

ABOUT US
• 1st year undergraduate mathematics student.
• Junior analyst for cryptocurrency division at QT Capital Fund.
• Started learning about cryptocurrency in 2019.
• Completed an EPQ looking at the overall effects of cryptocurrency.
• Inexperienced but interested.
• 3rd year undergraduate biotechnology student

• Senior analyst for cryptocurrency division at QT Capital Fund
• Started learning about blockchain tech in 2019
• Started actively investing in cryptos in 2020
(both short-term trading and long-term holdings)
CONTENTS
• Notable purchases of NFTs
• What is an NFT?
• How do they work?
• Gas fees
• Examples of NFTs
• What is the purpose of NFTs?
• How can I tell if one is valuable?
• Where can I buy one?
• Are they too risky?
NOTABLE PURCHASES OF NFTS
• Digital artist Beeple sold "Everydays — the First 5000 Days" for $69.3 million
through a Christie's auction.
• A 20-second video clip of LeBron James "Cosmic Dunk #29" was sold for
$208,000.
• A CryptoPunk NFT sold for $11.8 million at Sotheby's first curated NFT sale.
• Twitter CEO Jack Dorsey auctions an NFT of his first tweet, which sells for $2.9
million.
WHAT IS AN NFT?
• NFT stands for "non-fungible token."

• At a basic level, an NFT is a digital asset that links ownership to unique
physical or digital items.
• NFTs and cryptocurrencies rely on the same underlying blockchain technology.
NFT marketplaces may also require people to purchase NFTs with a
cryptocurrency.
WHAT IS AN NFT?
• THEY ARE NOT THE SAME AS CRYPTOCURRENCY!!!!

• Cryptocurrencies and NFTs are created and used for different purposes.
• Cryptocurrencies aim to act as currencies by either storing value or letting you
buy or sell goods. NFTs create one-of-a-kind tokens that can show ownership
and convey rights over digital goods.
HOW DO THEY WORK?
• Most NFTs are part of the Ethereum blockchain.
• Ethereum is a cryptocurrency, like Bitcoin but its blockchain also supports these
NFTs, which store extra information that makes them work differently from,
say, an ETH coin.
• It is worth noting that other blockchains can implement their own versions of
NFTs.
E.g. Solana, Hathor
HOW DO THEY WORK?
• When you buy an NFT, you are essentially buying a digital recording of
ownership of a token, which can then be transferred to a digital wallet. The
recording (or ledger) where that token is certified as proof of ownership is
called a blockchain.
• This is similar technology to where Bitcoin, Ethereum, Litecoin and other
cryptocurrencies trade (or rather where their ownership is recorded)
EXAMPLES OF NFTS
Examples of NFTs are:
• Art
• Video game items/GameFi
• Music
• Domain names
• Trading cards and collectibles

• Etc…
WHAT IS THE PURPOSE OF NFTS?
If you want to sell NFTs:
• You might be interested because it gives you a way to sell work (art, music,
etc.) that there otherwise might not be much of a market for.
• Also, NFTs have a feature that you can
enable that will pay you a percentage
every time the NFT is sold. Making sure
that if your work gets super popular
you’ll see some of that benefit.
WHAT IS THE PURPOSE OF NFTS?
If you want to buy NFTs:
• One of the benefits of buying art through NFTs is it lets you financially support
artists you like. Buying an NFT also usually gets you some basic usage rights,
like being able to post the image online or set it as your profile picture.
• Plus, there are bragging rights that you own the art, with a blockchain entry to
back it up.
NFTs can work like any other speculative asset, where

you buy it and hope that the value of it goes up one
day, so you can sell it for a profit.
HOW CAN I TELL IF ONE IS VALUABLE?
Rarity
• Good examples of rarity are a first-of-its-kind artwork
from a famous creator.
• Another factor of rarity is the effect such an NFT would
provide in, for example, a video game. People are
drawn to such NFTs because of their intrinsic value, this
gives a sense of distinction and determines the premium
value of an NFT.
Utility
• The utility of an NFT comes from its real application, in either physical or
digital worlds.
• For example, some NFTs are more than just collectibles, since they can be used
in games, like virtual lands, spells, or characters. This characteristic of NFTs
gives them immediate value, which accumulates over time depending on the
popularity of the underlying project.
• As the community of a decentralized game’s players grows, more of them will

be willing to pay top dollar for a unique card.
Tangibility
• Some NFTs are tethered to real-world objects, which gives value in terms of
tangibility backed by blockchain proof of ownership.
• The underlying value of such an object will be determined by its practicality,
scarcity, and the personal satisfaction it gives users.
• For example, having an NFT ticket to an exclusive event full of celebrities is
considerably more valuable e.g., NFT.kred, than owning an NFT tethered to a
bottle cap.
HOW AND WHERE CAN I BUY ONE?
There are different ways to purchase NFTs:
• You can bid on items, and the largest bidder walks away with the NFT.
• You can wait and enter for a ‘drop’ and hope you are one of the lucky
people given the opportunity to purchase the NFT.
• Or you can just go on the marketplace and pay the asking price for the NFT
you want (or try and negotiate a lower price with the seller).
HOW AND WHERE CAN I BUY ONE?
There are websites (known as marketplaces) where you can purchase NFTs:
• OpenSea
• Rarible
• Nifty Gateway
• Foundation
• Solanart
• SuperRare
To name a few
GAS FEES
• When you buy an NFT, you must also pay what's called gas fees
• This is because whenever you make a transaction on the blockchain
network, this needs to be verified by miners. For the miners to be rewarded
for their work and maintain the blockchain, they are paid in
the cryptocurrency.
• Recently gas fees on the Ethereum network have been high, so other
networks like Polygon and Solana have built their own NFT ecosystems
with incredibly smaller gas fees.
IS IT TOO RISKY?
• You might be wary of purchasing NFTs, as for all we know they could just be a
fad that will disappear soon.
• But we could ask, “what is propelling the latest rise in popularity?”
• One reason is the coronavirus. Covid-19 drove a boom, with the NFT market
reaching a valuation of more than $250 million in 2020.
• Part of the boom also came around the growth of blockchain technology
(including cryptocurrency). For example, Ethereum surged over the past year.
• Ethereum can be used to purchase NFTs in part or full, and as the value of the
assets in Ethereum grew, so did the buying power of the underlying owner.
IS IT TOO RISKY?
• The main reason why NFTs are likely to stick around centres around the idea
of uniqueness.
• Whereas paintings, baseball cards and other such works can be easily
copied, NFTs provide true sole ownership, which is appealing to many. Also, as
blockchain use becomes a more popular way to have proof of ownership,
NFTs are likely to keep coming.
ABOUT ME
• Postgraduate FinTech student.

• Senior analyst for cryptocurrency division at the QT Capital Fund.
• First learnt about cryptocurrency in 2015.
• Started investing in 2019.
• Currently mining Bitcoin and ETH.
• Minted and sold an NFT on OpenSea.
METAVERSE – HOW DOES CRYPTO FIT IN?
• Metaverse: A virtual-reality space in which users can interact with a computer-

generated environment and other users.
• Ownership, Creator Marketplace and Currency Issues, how does crypto solve
them?
• NBA2k – VC Issues: No room for content creators, game creators have full control of item
costs and dictate the buying power of their currency.
• Current Projects: Super World and Axie Infinity (Concept Builder: uses NFTs
and blockchain technology) then Decentraland and Sandbox
SUPER WORLD
Google Maps – NFT are used for proof of ownership of global coordinates in 'Super World'
Proof of Ownership: You cannot buy the same plot of land twice, making it unique.
ETH USED TO BUY AND SELL LAND
AXIE INFINITY – NFT AND AXS
Pokemon like game where you can collect, breed, trade and battle your AXIE NFTs. New feature coming
soon: Land
DECENTRALAND - 2017
HOW TO BUY LAND
DECENTRALAND
NFT USES FOR ITEMS – WEARABLES & LAND DESIGN
IN GAME CURRENCY & TOKENOMICS
• MANA
• Burning Mechanism (Note: How does it work?).
• DCL DAO owns 222M MANA and will release 22M MANA/year for next 10
years to Fund #Decentraland content creators & comps.
• As it is used more and more coins are burnt the value increases.
• No new tokens are minted.
SANDBOX – 2012 – 2018/2019
Difference in look: Minecraft like design

SANDBOX
SANDBOX LAND, WEARABLES, AND LAND DESIGN
IN GAME CURRENCY & TOKENOMICS
• SAND
• The Sandbox has created an interesting tokenomic structure for the SAND token. 5%
of all SAND token transaction volume is charged as a transaction fee. The revenue
made from fees is then split 50/50.
• Half of the profits go to The Sandbox Foundation, a community focused on growing
The Sandbox space by offering grants to promising upcoming projects. A lot of
games currently in The Sandbox have been supported by The Sandbox Foundation.
• The other half of the revenue from fees is put into funds for staking rewards. This
creates continuous cyclical utility for the SAND token as the platform grows. There is
a max supply of 300 billion tokens, being introduced into circulation in stages.
SANDBOX GAME CREATOR
Play to Earn: You can earn

AXS MC: $7.8 Bil SAND MC: $6.2 Bil
MANA MC: $8.5 Bil

IDEAS FOR INSPIRATION
• Combining the two: No current game mechanic to display a VM input, but if one was made then in the
Metaverse you could have a computer stored in decentralized computer storage. This could be used to display
videos (for your virtual land's cinema room), heads up displays (for your character), search the web and much
more in the Metaverse games.
• Filecoin – Decentralized Computer Storage
• VMware – Virtual Machines for Running OS
• Rental of NFTs – Currently there are no integrated systems to rent anything.

• Decentralized Servers: Eliminates the need for conventional games to be hosted on expensive servers; users can
use their own storage space to help host the games they play.
• Interior Designers for Metaverse with their own products (NFTs) or portfolio of purchased NFTs.
• Host events like club parties on your Metaverse land, or specialized missions/quests or even escape rooms.
• Game and NFT Creation
KEY TAKEAWAYS
• Which is better: AXS, SAND or MANA? Thats for you to decide!

• Pay to play: Get paid to play games!
• NFTs - Used for land, wearables and land design. Allows for a creator marketplace.
• Cryptocurrencies - Used for in game currency, often much more reliable and safer
than previous virtual currencies (NBA2K VC example).
• Look out for who holds how much and why this can be misleading.
• You can get started now! Sandbox offers wide range of templates with animations to
build on and methods to create game's without coding experience.
THANK YOU FOR LISTENING

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WHAT ARE NFTS?

ONE OF THE MOST POPULAR DIGITAL ASSETS OF THE YEAR

• 3rd year undergraduate biotechnology student

• NFT stands for "non-fungible token."

• THEY ARE NOT THE SAME AS CRYPTOCURRENCY!!!!

• Video game items/GameFi

• Trading cards and collectibles

NFTs can work like any other speculative asset, where

• As the community of a decentralized game’s players grows, more of them will

• Postgraduate FinTech student.

• Metaverse: A virtual-reality space in which users can interact with a computer-

Difference in look: Minecraft like design

Play to Earn: You can earn

MANA MC: $8.5 Bil

• Rental of NFTs – Currently there are no integrated systems to rent anything.

• Which is better: AXS, SAND or MANA? Thats for you to decide!

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