WTF Is an NFT? (And Should You "Invest" in One?)
You've probably heard about the NFT, but perhaps you don't fully understand why people are buying/selling them...you're not alone! Today we explain the topic and whether it really stands as the next "investment paradigm shift."
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This channel is for education purposes only and is not affiliated with any financial institution, although Richard does work as an employee for an investment manager. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.
Just for fun, let’s start the (hypothetical) bidding at $0.01; what would you actually be willing to pay for the bagel NFT? (Completely non-binding but interested in genuine answers!)
1 cent is over my budget, I'll pass
I mean 1 cent is not something I'll miss so I'd pay that
Is this the quest to find the greatest fool? :)
Make an NFT and see how much it goes for as an experiment. If you feel bad about taking peoples money then donate that money to charity
50 cents probably
But hear me out for a second here... what if we put the Szechuan Sauce... on the plain bagel? Does this increase it's value? Or is it now worthless because the sauce has been opened and the bagel is no longer plain... Someone's gotta be asking these questions.
if Elon Musk suddenly make a tweet of it, and subsequently, an NFT, that NFT will be worth a lot. because, Elon
Damn🤯
Depends on where you put it. Over the bagel or over the frame
A long while ago, some people actually thought they could retire with beanie babies. Those dolls were arguably 'collectibles' and some were indeed rare. Long story short, most of them had to re-plan their retirements.
A longer while ago, old ass boomers thought they could retire on baseball cards. Turns out, some could.
Not to mention the late 80s/early 90s, when people thought they would get rich collecting and speculating on superhero comic books.
@@chezellis I remember those times. Marvel milked it for all it's worth. I bought 6 covers for the same godddamn issue, because the variant cover art was 'limited' and 'rare'. Marvel almost went bankrupt with these stunts.
@@edwinlor7932 That is what happens when news articles start reporting that you can retire off of them because of the value of Action Comics #1 issues printed 1938.
@@chezellis That's because the comics that sold for a lot were "golden age" comics. Basically, adults who grew up on those comics of that era and missed them wanted to go out and buy any surviving copies to relive their childhood and some of those adults were rich and desperate enough. It's the same with baseball cards. It's the same with Pokemon cards. It goes in cycles. If you want to predict the next thing to potentially capitalize on look at what your kids are into now and in 20-40 years they will feel nostalgic for those things and MAYBE shell out good money. But in 20-40 years you'll probably get better returns from the stock market in that time.
Ah, NFTs. Amazing technology. Tremendously useful for doing things we could do already, at a greatly increased cost and with more buzzwords. Perfect for techbros. Pretty good for money launderers, too.
"Hopefully it's starting to make a little bit of sense as to why people are buying and selling these things." No. No, sir, it is not.
Which part are you lost on?
Let me help you: Tulip mania / Beanie Babies in 2021.
@@sor3999 people said the samething on Bitcoin in 2012.
@@changxing7690 But bitcoin is exactly what NFTs aren't; fungible. It's fungible-ness is what makes it useful as currency. NFTs for random tweets and art are not useful in that way.
Selling makes sense
The world really has gone crazy when investors are talking about virtual worthless collectibles which are crazy expensive
Zoomers raised by Internet.
I thought the same. I even find buying collectibles as an investment a bit weird. But this is at a completely different level of weird. On the other hand, I am a boring person by default. I'm mainly interested in the mining industry, phone companies, banking, and insurance. But I just can't avoid the thought that soon music stops and some people are left without a chair.
stay in denial just like people were with the internet years ago. NFT's are the future and if you look into them you will realize that it is inevitable and that there are endless possibilities for them.
@@vlaire7737 Two(?) words(?): Dot-com bubble.
@@Juhno I agree it is in a bubble right now but once things go back down to a reasonable price people start looking into NFT's for more than just quick money, that is when you will start seeing true and stable growth in NFT's. I don't think all NFT projects will make it out but there will be a select few that are already out that will be good and ones in the future as well that will be succesful. So much room for the space to grow it is undeniable.
As a comic book retailer I can definitely say, with some confidence, that scarcity does not necessarily create value. There are plenty of scarce comic books (low print runs) that are worth very little because no one wants them. People suddenly want it when there is some hype around the book or a character such as a movie or tv series or the return of a long abandoned or dormant character. But these books rarely retain that value since it was generated by an event. When the event is over, the value usually drops.
Price is what you pay, value is what you get. In this new strange economy, it has become more of a "price is what you pay, PERCEIVED value is what you get". It is more of a sentiment than actual tangible value.
@@Clytia I dont think it's a sentiment as much as an unreasonable expectation. It's a huge speculator market right now, which is simply gambling. Prudent gambling is fine, even necessary, but wild speculating where people are essentially betting the proverbial farm is not only unnecessary, it's dangerous. A few people win, most people lose and some people lose badly.
@@josephmassaro Unreasonable expectation is still part of sentiment. People are buying (or gambling) for purely emotional reasons: greed, euphoria, FOMO.
@@Clytia Not necessarily. A lot of people think they are cleverer than they really are and know a sure thing. There are a lot of armchair economists and investors. We generally call them day traders.
@@josephmassaro "We generally call them day traders." No. Day traders can be either professional or retail. I think you are just pointing at the retail day traders and convoluting them with said "armchair economists and investors".
This reminds me of that "I am rich" app that sold for $10 000 a pop before it got banned by Apple back in like 2009 or so.
Based
Lol
That was a classic Veblen good ;)
I think this video is too kind to NFTs - I've seen threads from programmers talking about how insecure they are - the data in them is often just a URL link to an image, or JSON file, and the NFT doesn't contain the image itself. Meaning that if the platform goes down, your NFT URL could point to nothing, or some new malware site! Not to mention that a lot of artists are having their art stolen and turned into NFTs without their permission, and artists who are making their own NFTs often aren't making a profit - they're just paying the platform some fees and getting nothing out of it.
NFT stands for No F*cking Thanks.
That's what people was saying about bitcoin years ago for miss out again
@@Stonecoldalston That is the marketing pitch "don't miss out this time" it is called generating FOMO.
Haha time will tell who is right
@@christiansaga8286 Remember Crypto kitties?
@@dheeraj_one Remember AOL? Yeah I remember. Remember amazon? Both were part of the dot com bubble. You're eliminating the nuances. Not every dot com company was the same. Not every NFT is the same. As I said, only time will tell. I am amused at people who are so sure they can predict the future
Imagine that your bagel digital art gets all the hype and gets sold for a million dollar. All your research, knowledge and hard work trying to invest is thrown out of the window.
I'm starting drawing bagels...
You forgot to mention that the buyer would've probably paid in crypto, maybe even in their own meme coin. So it'd be a real question wether the tokens seller received were turned into real world currency, at what rate if so, and if in the end minting cost didn't eat up all profits.
Whoever came up with the idea of selling a worthless amount of bits for a lot of bits that can easily be copied, is a genius.
Ya really didn't watch the video huh.
So thing is, no matter the way of measuring value, digital art still holds a lot of value. If you look at the classic supply and demand value measure, it holds a lot of value since there is scarcity in the code of the NFTs itself If you look in the eyes of people like Marx' value or work, it still holds a lot of value since the artists put a lot of thought and work into it
@@nekoy2010 it holds no value until there is a demand, no matter the scarcity. And they aren't selling the art, they're just selling a token associated with that art. "You were the first to have this, congratulations." Now why would anybody want this? They can't very well hang it on a wall and brag about it, can they?
@@SwissSareth 1: there is obviously demands as it's shown by the price ppl are willing to pay for it 2: they're selling a token that doesn't say you're the first, but rather you're the only one who owns this, just as Maurizio Cattelan sold certificates of authenticity for "Comedian" (the banana taped to a wall) 3: they want this because it's the work of an artist they like. they can also print it and then hang it on a wall and brag abt the fact that they own them. However, i think most of the people buying those are buying it not to support the artist, but rather to sell it at a higher price lol
It can’t be copied tho ?
Best painters of history: Van Gogh Leonardo da Vinci Monet The Plain Bagel
My friend bought an NFT for 1800 bucks. Sold it for 30k a few days later. I knew I was never going to touch this game with a 10 foot pole because I know I'll end up being the last fool at the end of the conga line
As someone who’s in finance as well, I love your videos. Simple, comprehensive, and straight to the point. Keep it up!
You telling me not to buy that bagel makes me want to buy it O_O
That's the idea, if you buy he wins, if you don't he wins either way.
If you put that bagel on an nft it would be worth a lot. There is so much value in it. You're popular. You drew it on your video. You told people not to buy it. Buying it would be ironic. You could easily sell it for a $1000.
I got dibs, I want need that bagel NFT!
I wouldn't buy that shit and you wouldn't either, stop trying to guess what other people want.
@@alainportant6412 maybe none of us would be a clip of LeBron dunking for millions of dollars but someone did didn't they? Just like someone bought GME at $500
@@alainportant6412 People might buy it to prove you wrong
@@hypnogri5457 hi hitler ^^
8:34 Never underestimate the power of a meme. I wouldn't be surprised if it reached a few hundreds just for the LOLs.
Just to prove him wrong, or maybe so that when Richard becomes the next Warren Buffet it'll skyrocket.
*Why would I invest in one when I could sell one* That's thinking in 3D 😎❤️
A fool and their money are soon separated. I've been separated from mine for many things, but not on NFTs.
hmmmmm, take art trading but make it less regulated and more liquid? Sounds like a money launderer's wet dream.
Da
I was waiting for you to make this video instead of looking it up myself. Great video as always !
I'm late to this conversation, but over the year we've learned two hard and fast rules of NFTs: 1. (Selling) You must be well known. 2. (Buying) If you're looking to turn a profit, the originator or piece must become famous later down the line. If neither of these things are true, you're not going to have a good time in the NFT realm. That's why 99.9999999% of us will never see anything remotely positive from the NFT space.
And this is how you know you don’t keep up with ‘NFT realm’ lol. Your hard-fast rules are not true at all.
@@benzo8859 word?
@@benzo8859 word?
I'm pretty sure the quotes around "invest" in the title answer that question. Thanks for your great videos.
Great explanation, Richard. I especially appreciated the visuals.
Thank you! I kept seeing these pop up in the news everywhere and I was like "What the heck even are these things?"
Always appreciate your plain and simple explanation!! Many many likes~
Was waiting for your breakdown!!!
All I knew about NFTs before was that they're a new avenue of fraud and theft for artists to have to worry about. Now I know that they are a new AND stupid avenue of fraud and theft for artists to have to worry about.
I love that moment when you ‘understand’ the theory behind something baffling. Thanks for this video! It’s interesting in a ‘things only have value if enough people believe it does’ way. I can’t imagine the mindset of thinking such things have any value at all. But I do believe some people will make money on it, in a kind of... ‘leveraging the ignorant rush of the masses’ way. Which I guess... *makes* it valuable. *_* Like you said, a chain of ‘greater fools’ until one fool is left holding the bag. As you described this, it felt really familiar. Like a new skin for an old scam.
Great vid, thank you - collectibles (incl. NFTs) fall in and out of fashion which means sentiment, herd mentality, FOMO, YOLO etc etc. I guess some of the earliest NFTs were tulip bulbs not so long ago?
Thanks for this great explanation!
That's one of the best videos I watched explaining what NFTs are. Thanks for sharing this! 🙂
We were LITERALLY just watching a 30 min video trying to figure this out last night with only mild success. Great timing!
I really appreciate your channel and how you clarify things
@The Plain Bagel and you're the fake account pretending to be him.....nice try
I have a new program that I would like to introduce to you, it's generate profits on a weekly basis
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Thanks for this great video! You do an excellent job explaining what NFTs are and why people are currently buying them. Like you said it's not just about scarcity, there also has to be demand. And demand for collectibles is a fickle thing, particularly in a space like NFTs where the sheer number of different collectibles can increase without limit. It's very much a fad at the moment, and when the mania dies down most of the NFTs will end up being worthless. But there are some legitimate NFTs that might survive. I recently heard about a comic book artist who makes NFTs of his art. In the comic book industry publishers pay artists by the page, so it's hard for them to earn a steady income. But traditionally artists have had the opportunity to supplement their income by selling the actual paper artwork they produce to collectors, after it's been used to publish the comic. Unfortunately artists who work entirely digitally have never had this option, until now. For them NFTs represent an opportunity to regain that lost income stream. I think that's the kind of NFT that will retain some value after the current fad ends, because it's a close copy of an existing paper collectible. There's already a proven demand for the artwork.
I think you should do another video like this and go into the DAOs and new game theory mechanics, since now its not just the file information but the access/utility it grants you that people are giving value.
Great video, keep up the awesome educational media!
That is the greatest depiction of a bagel that I have ever seen. That bagel is priceless.
And when NFT hype wears out, someone will release NFT2 and people can re-sell the popular tokens in a new ecosystem. This sounds like a great way for celebrities to conjure bags of money from selling virtual junk.
thanks for guiding man...
Very well done nice work!
realist video i watched on NFT yet! Thank you!
lol honorary boomer. Love the Channel, I have learned a lot of investment basics that have helped me forge my own investment path. Thanks and keep it up!
You told me not to buy your invaluable bagel. Now I must know where to buy one!!!!
Bagelcoin ICO is just around the corner 🚀🚀🚀💎💎💎🙌🙌🙌
Tulip mania in digital version.. that's a true modern meanless bubble.
You may be right or you may be wrong. Time will tell
Awesome content! NFFT will be a great way to showcase NFT’s. you should explore it!
After watching your BTC video I assumed you would be very skeptical of NFT's buuuuut, you even turned me more onto them to understand their value a little more without all of the hype behind them!
11:51 Pokémon cards are not just pretty artwork. They also function in the game so, in a sense, they actually do something. Some cards can give a player an enormous advantage. As long as the game remains popular (which admittedly isn't guaranteed), certain cards will retain some degree of value.
I'm not a boomer by definition but I still found this no-nonsense video extremely valuable. Thanks!
He's not either. I think he's making fun of those of us who are real boomers! 😢
I mean, it's basically just if you would own/collect art, trading cards, stamps, signed t-shirts, etc. It's got as much value as you give to it and is worth as much as people will pay for it. If it doesn't have much emotional or whatever value to you, maybe hold off on getting it. I think you explained and covered this topic rather well in its benefits for artists being able to earn royalties and also the various risks for buyers.
But anyone can download the exact same 1s and 0s and have 100% identical copy as the original for free. All it is bragging rights, which is stupid. There is no real scarcity.
I don't know if it's really the same. At least with physical collectibles, there is some material difference between an authentic and a replica. Even if someone made a near-perfect 1st edition Charizard rep, it's still not made of the original cardboard from the 90s. But the NFT Nyan Cat and the Nyan Cat I can download off of the Internet for free are actually mathematically equivalent. Only the metadata is unique, the underlying content is exactly the same and infinitely replicable.
Great explanation.
Isn't this just the beanie babies of the 2020s
Wtf is that
@@fitrianhidayat Basically people investing in overhyped up stuffed toys that used to sell for thousands of dollars. Let's just say that didn't end well.
Not quite. There is viable use cases for NFTs. Not to mention people who genuinely want to support artists can do so via buying their art, of which each sale thereafter will still help the initial artist. We could theoretically see the end to the "starving artist" mindset as you could have a potential passive income stream if your art is traded back and forth. Or used for money laundering like art typically is used for. Or for auditory art. Musicians can help fund their album by selling NFTs. Whether with additional functionality like back stage pass access or free concert tickets to owners of the NFT, they can simply put out into the blockchain a means for fans to support a musician and possibly have some cool art as a talking piece to go with it.
@@PirateDion I disagree.
@@mqb3gofjzkko7nzx38 Cool. Doesn't make the viable means disappear.
Okay but that bagel actually demonstrates a pretty good understanding of the shapes that make up the bagel, so not bad?
Hi there I just subbed just for the hopes you make the Bagel NFT and walk us through the steps to actually make it into an NFT. That way we all learn how to sell these things. Do you have to give the price or do they give the price? is it like the ebay auction or like amazon?
I dont speak very well english, because I´m from Venezuela... but I really think you splain AWESOME. Thanks.
Tulip mania has nothing on the current crypto mania.
This ^
The current crypto mania looks so much like the Dot Com Bubble. In the 90s, any company with an internet presence saw their stock spike. Today, any project that uses the blockchain technology could have people valuing it in the billions. When people realised that internet doesn't automatically make a company good, the bubble popped. The same thing will happen to crypto. The internet and crypto are legitimately great technology. But that in itself doesn't make any project/company good.
You guys should take time to actually learn about crypto. Even if you removed tokenonmics and the idea of buying coins from crypto, block chain technology is greatly beneficial and will help change the world significantly. That you can make money as well, why not? Keep sleeping on these investments if you want, the rest of us will enjoy the gains.
@@PirateDion Those following this channels will only think of crypto and blockchain as tulip-like bubbles, basically here they learn to be laggards on technology and innovation, as well as slaves of the centralized financial system flooding markets with inflation. ... until this guy one day will eventually change his mind like Ray Dalio and others, and start covering crypto positively, or at least fairly - which he never did.
@@lainiwakura44 Yeah just try correcting people here and there as time goes on. If someone mentioned crypto to me even a couple years earlier than when I got in I'd be absurdly more wealthy.
hey Richard, what do you think about NFTs being applied to digital video games for the sake of having a second hand market?
The only thing I understand as a digital artist is selling a Photoshop file or flat images of the Photoshop layers. NFTs just sound like owning a hyped-up digital image with a distinct timestamp.
@8:18 what are those specs on the bagel?! Is Richard trying to scam his viewers, passing off this Bagel With Sesame Seeds as a one of a kind Plain Bagel? I'll be taking my $500,000 elsewhere thankyouverymuch.
I still need that bagel, I have dibs. I need it!
I NEED THAT BAGEL NFT!!!!! I only have %210,000, but I'll give you everything for it!
I want to own this bagel!
NO,ITS GONNA BE ME!!!!!1111!!
I wouldn't buy that shit and you wouldn't either, stop trying to guess what other people want.
Bagelmania has begun
It be longer, with more detail, but i like it
Top notch! 😍
Make that plain bagel into an nft! Would be interesting to know what it would sell for.
the way you say "bag" is funny lol
12 mins for something that can be explained in 1 minute
This sort of stuff just proves we're living more and more online rather than living in reality.
I listed my jerome powell Money printer go BRRR video as an NFT, which went completely viral in the finance space but I'm surprised I haven't even received a single bid yet, lol. You'd expect something like that to pick up during the NFT hype but I guess not.
Should I hurry up and make a Mona Lisa NFT 🤔? Is that how this works? Don’t let the Louvre know! My screenshot’s about to make me some cash.
An NFT is just a tiny data packet that still has to be opened by software on the other end. It’s one of the biggest misconceptions that you own it into perpetuity and aren’t reliant on other parties. Services like top shot don’t even give you the private keys to access and recover your NFTs or interact with the blockchain through a CLI, meaning you don’t own them anymore than a CSGO skin
So is it kind of like a propietary file format? Or is it just that the program people are using just doesn't let you see the keys?
Can you make a video for ECOMI-OMI? Thanks!
I'm personally super excited about the future of NFTs, but I currently think it's a bubble. Once the bubble pops, I may buy something, idrk
The tech under it will stay and will be useful one day, but right now those NFT "collectibles" are just a new Tulip bubble.
This stuff is very interesting
We need to create a SPAC for this Plain Bagel NFT hedged in Dogecoin!
i am a fan of your show . could you make a video about michael Saylor Bitcoin strategy and 1.5 billion tesla bitcoin purchase ? i just wondering how is your view about their market moves . the reason i am asking if because there is a lot of debate about
It's our only for digital assets? Can I tore then to an actual painting? Can you tie it to something completely different like a "meeting with a celebrity" for example.
Greater fool. Makes me think of real estate in Toronto and Vancouver. That’s going to be a problem sooner than later.
5 minutes into the video, and I still haven't learned what this NFT is. Time to look for another video
If you could encode a contract that DID confer copyright ownership and also gave you the ability to spawn limited time copyright use NFTs for the underlying asset, then they could actually have a real utility.
A universal asset is impossible, like in terms of programming this would be ridiculous
I think it’s a smart / great way to manage intellectual properties
I have a new program that I would like to introduce to you, it's generate profits on a weekly basis
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important to note that your NFT isnt for the actual digital asset it points to a random json file on a web server so if that goes away or is manipulated you have nothing and there is a MASSIVE amount of environmental harm caused by mining crypto
I think you explained this really well. But Richard, if you think they're stupid, just say it! We appreciate you being nice about it, but sometimes you gotta punch an idea in the face!
The plain bagel is a smart guy
Regardless of what you think about NFT's you have to be happy for Beeple. Guy made a piece of art every day for 13 years for free. Good on him.
Can you make a video for ECOMI-OMI?
I had a question(it may sound stupid) but when an not sale takes place does the seller get paid in bitcoin or some other type of cryptocurrency or actual currency?
Three travelers arrive at a hotel and ask for a room. The clerk charges them $30. After the guest have gone to the rooms, the clerk realizes he was only supposed to charge them $25, so he gives the bellman $5 to refund to the guests. On the way to the rooms, the bellman realizes that he can't easily divide the $5 three ways, so he decides to only refund $1 to each guest and pocket the other $2. So each guest paid $9. $9 X 3= $27, plus the $2 the bellman kept makes for $29. What happened to the other dollar? It's questions like these that make me suspect of crypto investments.
$9 X 3= $27, minus the $2 the bellman kept makes for $25 (which the clerk has).
But the assets will be locked to systems they're created from, there seems to be an assumption they'll work across all computer systems or programming codes or something
Except the files aren’t directly attached to the contract. If Twitter goes down so does your jack dorsey tweet.
It seems to me an intangible asset that you can create infite exact copies at no cost isn't the a reliable storehold of wealth. At least a physical collectible cannot be duplicate for free, regarless of it's value.
I'm not sure you are correct about file being attached. It is probably a pointer to a file stored outsid eof the blockchai
7:51 I'll also make something scarce right now - myself.
"...but it's not the same thing as a Louis Vuitton handbag that has value", but what is the value of a token applied to something that you don't own and can't copyright?
While I agree that the NFTs being sold now are insanely overvalued, there are some things I’ll say regarding the future of NFTs. To start, they aren’t just a collectible token. It’s a digital ownership contract that lives on the blockchain. When put in this context, NFT takes on an entire new meaning. This can extend to tokenizing mortgages on chain, crowd sourced voting, provenance of physical goods (such as luxury items or rare artifacts), tokenized rental income, tokenized land ownership, and many more. I agree, I would not put a single penny into an NFT right now, there will be a very small amount that will hold value. One thing is for certain though: NFTs will become a large part of our future. A topic less talked about, and one that I expect to gain major traction in the coming years, is defi, or decentralized finance. That is an even deeper rabbit hole that will have unfathomable effects on the global financial economy.
If I own the NFT of something can I reproduce it for profit? Say printing the image of said NFT on T-Shirts or bumperstickers?
Please, make an NFT bidding for the bagel drawing. See what happens. Donate the proceeds, or not, as you see fit.
@The Plain Bagel fuck off phony.
creating exclusivity for ones and zeros