• Meg Combs

What are NFTs: A Simple Explainer

In the last five years, NFTs have gone from a fringe internet sensation to a global cryptocurrency phenomenon with astronomical growth. With every stubble-faced, beanie-clad tech-bro/sis forcibly extolling this bizarre, meme-adjacent, new money-making scheme, is it time for everyone to hop on the wagon before it leaves town? Well no, probably not.

AN image where the letters NFT are on cubes on top of a computer chip.

What is an NFT? Is it the same thing as Crypto?

NFT stands for Non-Fungible Token. These are created using blockchains. Blockchains are public databases that are universally accessible, where people can create unique pieces (or tokens) of data. This uniqueness is the basis of their scarcity and perceived value.

NFTs are not the only version of scarce digital assets. You’ve probably heard of cryptocurrency, which is an early generation of internet-based currency. Compared with NFTs, crypto tokens take a great deal of energy and money to create.

Alternatively, NFTs offer a huge amount of diversity of uses besides simple units of money.

While most of us imagine a series of memes and highly pixelated gifs when thinking about

NFTs, their possible uses range from ‘smart contracts,’ to exclusive internet club tickets, access to celebrity meetups, and private discord servers for creatives all over the world.

How do people make money off of them? How did a booming sale and trade develop around a bunch of memes? More importantly, how can someone catch the tide? NFTs, like many MLMs before them, exist and have value due to the value given to the people who promote them. It’s no accident that Stephen Curry, Jimmy Fallon, and Tom Brady are tweeting and commenting on this newest trend in FOMO culture. This is the bread and butter of NFTs.

Once one of these big names within the online community tweets about or references an

upcoming “project” or series of these NFTs (search Bored Ape or CryptoPunk) attention will

grow around it. When they finally drop, a select group of early investors has the opportunity to ‘mint’ them, essentially claiming sole access to one of these unique bits of the blockchain.

This is when those buyers hope to make a profit. Usually, NFTs are initially dropped at an

extremely low price, or even for free. But once they’ve been sold the first time, buyers move

them over to a secondary marketplace, such as OpenSea - where the bidding wars can happen in moments, and individual NFTs occasionally explode in value.

To execute a successful ‘flip’, a seller will assess the potential resale value of an NFT by its significance within a project, the rarity of its individual properties, and finally the rate of

listings and sales of associated works. Ideally, sales of similar pieces should be happening

every few minutes if a seller wants to make the biggest profit.

Making it big in NFTs requires insider knowledge, a network of coordinated social media, at

least a little bit of starter money, killer instincts, and most of all luck. And that’s when no one is

using the anonymity of the platform to pull off a scam.

How are they being used for crime?

While it doesn’t make up an overwhelming amount of the revenue moving through virtual

marketplaces, criminal activity, and dishonest bidding practices are extremely difficult to

safeguard against the average buyer.

A popular tactic of resellers who want to artificially boost the price of their product is to create a series of false accounts. They will alternate between these accounts, progressively making

higher and higher bids with the intent of gauging an unsuspecting buyer.

Another popular tactic of unscrupulous sellers is to allow bidders to send in their winning

payments before simply disappearing with the money and the token. In the anonymous

landscape of these digital marketplaces, this is surprisingly easy to do and difficult to trace.

While sites like OpenSea have billions of dollars passing through them a year and NFTs like

Bored Ape is valued in the millions, this latest development in internet culture carries with it

many of the cliches of the American gold rush. The optimism and fanatical enthusiasm of its

small-time investors bolster its financial success, but likely not for those individuals.


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Meg Combs is a US-based Journalism Graduate and a Content Writer at the International Youths Organization for Peace and Sustainability. She is currently an assistant coach with the Farmington Crew team.

Edits by Dib Hadra.