NFTs 101 - Benjamin Yu

all right thank you so much for coming guys really really appreciate the support and we're super excited today to walk through basically nfts as much as we can cover in 20 minutes so for some contacts my name is ben this is my my is the ceo of kiri sadie's i'm the cto of curie savvy's we made the first educational nft project and our real goal is to try to educate people as much as possible from the ground up about web3 and nfts we've also launched the most comprehensive nft course on nas academy and we have a 30 000 ward article nfts 101 that we're trying to essentially condense here as much as possible into 20 minutes so without further ado let's get started cool so last year was the year of nfds so you might have seen this like crazy news of people sold on ft for 69 million dollars and crypto punks just pixelated art was sold for 24 million dollars and bore a yap club which was just launched last spring is already partnering partnering adidas the one of the largest you brand and what is going on and we also launched our octopus jpeg nft collection and we made 1.7 million dollars so it's crazy right and why people are spending so much money for nfts and why people are so excited about nfts is it just a bubble or scam or is it just that people are going crazy we believe that nfds are the future and nfds can make crypto go mainstream so before nifties people who are into cryptos are like people who are interested interested in science computer science uh finance and technologies right and nft but nfts are bringing more people who are interested in art culture music media so there's so much influx of people who never touch crypto and those people are interested in now crypto and coming to this space so this and nfts is and if these are the driving force of blockchain technology so we are going to go deep into like why nfts have values but first let's get into what exactly is an ft so nft stands for known fungible token so it's unique no not interchangeable crypt asset so what exactly does non-vegetable mean so fungible items are the things that can be perfectly interchangeable for example like money so for example if i have my one bitcoin or ethereum or ether and if you have one ether it's completely interchangeable right you don't get upset if you exchange because it has the same value but most of the thing in the world is actually non-fungible so for example if i try to exchange my dog to your dog probably you'll be upset or maybe i'll be upset because those are two different things right it's not interchangeable so no non-fungible tokens are the tokens that are all unique so for example we launched this octopus nft project and each one of them is a token right but all of them have different traits and all of them have very different values so all nft tokens are very unique different tokens so how exactly do nfds work so there's a misconception that people think that images or videos or text on the internet is actually nfd but that's not true it's actually a certificate of ownership that proves an ownership so think of it as the title of the house so if you just look at the house you you don't know who the owner is right you have to look at the title and that title really proves the ownership right so it's the same thing same concept this token the certificate represents certain digital assets such as like image or video or text and that can be owned by certain owner like like wallet address and the record of who owns this token and that represents certain image or video or any digital asset it's uh all saved in a blockchain and it can be viewed by anyone and also permanent and so that really made the made true digital ownership possible so before nfds it was impossible for digital assets to have values because who owned jpeg nobody knows right there's no way to prove an ownership but after nft is full on jpeg you can just go into blockchain and see like who owns it and also not only that you can see when it was created and who created this and when it was sold to different different person so it's it's all visible and it's all saving blockchain so true ownership of digital asset became possible for the first time in the history of internet all right so now that we know a little bit about the technical background of what is an nft you know how is an mt made what exactly does it represent let's talk about why nfts have value so this is pretty heavy we spent you know two hours in a 30 000 word article trying to explain this online so if we don't cover everything here read that to actually get into more detail but to really understand why nfts have value we have to understand why does physical art have value and we have to answer two questions there one why are some art pieces like say the mona lisa worth hundreds of millions of dollars and two why are the original art pieces worth more than a replica that might look almost identical and so let's go into that why is the mona lisa worth 800 million dollars you could say it's the best art piece ever made and okay sure maybe the best rpgs ever made is worth a hundred million who knows it's maybe the most famous rp's ever made and maybe that also it's a slightly nuanced thing that we'll talk about in a second but maybe that also justifies a 800 million dollar evaluation maybe it's just because people are crazy maybe it's something above to really answer this we need to dive into the history behind the mona lisa and if we say it's the best art piece ever made well there's something interesting for about 400 years after the mona lisa was created in the 1500s almost no one in the mainstream public knew about the mona lisa no one knew about da vinci or anything about this piece and it was only in 1911 when one very interesting kind of accident happened that the mainstream public started to know about the mona lisa which is kind of weird if you would think that this is objectively the best rp's ever made right and so what happened in 1911 well perugia this italian thief stole the mona lisa from the louvre and overnight this became a huge scandal and so all the newspapers reporting from page news everyone started to hear about the mona lisa this huge scandal in the loop and from that you know that might have been just a blip on the radar by itself but what happened next was people started making memes of the mona lisa and so there's another famous artist who made this kind of vulgar parody and like that started spreading and essentially was one of the first like and the memes right and so as that spread more more other artists were like oh hey actually this is kind of funny right we can make our own pair of these and you know today we're still doing this and you can see here's the corona lisa right and so as that spread the mona lisa started to gain this massive kind of cultural mindshare and today you can go to anywhere in asia europe africa america and ask anyone that they really know what the mona lisa is right and so does that really justify 800 million dollars of value well there's a here interesting thought experiment so the former art director of the lube estimates that 80 percent of people who go to louvre go just to see the mona lisa and you know there are 10 million people who go to leave every year 20 a person that's 200 million dollars right and 160 million of that is just to go see the mona lisa so if you were to degrade yourself enough to buy the mona lisa and you know kind of prostitute out there as you know a cash flow asset it's actually a pretty good deal right if you uh compare it to any kind of real estate properly the uh the cap value on this thing is quite good and so you know that's one way to kind of you know see that when something is famous when something has cultural mind share there's inherent value that comes from that as opposed to some other piece that might be technically just as good as a masterpiece but doesn't have that fame for whatever reason it doesn't have that fame when you get that it's worth it and so now we can look at these internet memes right so there's side eye chloe that sold for 74 000. there's disaster grills sold for 473 000 right and first you look at these and they're sticker shock it's like this is insane this is a random video that someone uploaded onto youtube and now it's like selling for five figures six figures right but then you think about it it's like how many people know this right probably all of you here no sidelight chloe no disaster girl and how many memes have been spread with that and really like now you compare it to the mona lisa worth 800 million dollars right and actually this like starts to seem like maybe possibly a steal for the cultural mind share that these things have and then the other question that we really have is you know people say you can just right click save this right you can just duplicate this and you have the exact same thing well why is it worth so much more to have this nft versus just the jpeg that you save that's exactly identical right and really we can go back to the mona lisa why is the original mona lisa worth 800 million dollars but a replica that you can't even tell the difference if you were to go into a museum and look at the two uh is worth just a fraction of the price and there's an interesting thought experiment because there's an estimate that 20 of all the art in museums is actually fake and these are things that experts have looked at and they can't tell the difference there's no chance that i could tell the difference if i walk into museum and you know chances are statistically speaking we've all walked into a museum and we've looked at a fake piece of art and it's had the exact same emotional application it's at the exact same value to us without us knowing that it was a fake thing right but uh you know there's no museum in the world that just has fake art right and chances are you wouldn't be as excited to go to a museum that's just filled with fake art even if you don't know that it's fake and so intrinsically we know in the real physical world that there's some gina sequoia about you know the original art piece that just has more value than some replica and the same thing holds true in a digital world there's no reason that these digital assets now for the first time that you can put a title behind their certificate and say you are the original owner of this art piece this nft doesn't have more value than a copy and so really it's the ownership the fact that you can say i am the actual owner of this value piece here a digital asset or a physical art piece that gives you the value there and so now let's talk a little bit about nfcs at the code level and all nfts almost today are on the ethereum blockchain there are a lot of other blockchains out there solana terra avalanche and so forth but the vast majority operate on ethereum the first smart contract protocol and they use what's called an erc 721 standard and so why is this important why are standards so interesting well erc 721 is beautiful not because you know it's technically the best way that you could do all these things but rather it's just because everyone agrees to make their nfts in the same way so they're all interchangeable and interoperable and so you know it's like think of batteries right batteries are very useful because you know a double a battery anyone can make a new one and you can trust that it's going to fit in the receptacle for any item that uses double a batteries or a light bulb you know the fixtures all have standard sizes so they just automatically work same thing with this with a erc721 standard you can create something like openc a marketplace where you can buy and sell nfts and openc doesn't have to do any manual work when we come on and we say hey we would like to make a new nft let's go make curious abbies these octopus jpegs we can put that out there and automatically openc knows okay i can let people buy and sell these without doing any manual work to know how their code works because there's a set of certain promises that our nft will work exactly the same way with these base functions as any other nft that exists and so if they want to find out who the owner of the cenote is they just call the owner of function and they call in the token id token id 3000 is owned by ben used something like that if you want to transfer it to someone you call the safe transfer from function all of those things work exactly the same across all nfts that follow the standard and that's what's uh really powerful about the erc 721 standard so ben just talked about openseek and really uh read all the information from like from blockchain and display all the different collections so what exactly is happening behind the scene i'm going to walk you through like step by step what's going what's what's exactly happening so like left side there's a openc nft marketplace right and first of all openc is going to request token uri which is the location of the metadata and i'm going to talk about metadata in the next slide but basically uh openc is requesting token ui for certain token id in this case 49999 to the smart smart contract of certain collection in this case we are using the the example of curious addis because it's our project and this smart contract extends the erc 721 which is the standard that ben just talked about so openc request open your eye and get the url of where metadata is stored and once that once openc gets that gets the url it will it will access to the url it could be stored in ipfs which is the centroid file storage or it could be stored in the website wherever that is openc will request the metadata and then it will get the metadata back and it's basically just json format it's an object it's just a really simple object which i'm going to show you after this so because it's just an object uh openc can actually parse the metadata and derive the inform information that you need to display on the page to show in nft so what is metadata metadata is defines the information about nfds so most importantly it will show it will store the information that how where the image is stored or where the video is stored whatever the asset it's going to be so it will have that that information and also you have the information like a name description those base information in this case name is like a little boring it's like number one but whatever the name is it's going to be stored on metadata and i'm talking i'm going to talk about a little bit about attributes so attributes mostly so most of the nfts like the collection have this thing called attributes and these are used to define determine the rarity so reality is the concept that a lot of nft collection use so because all the nfts are different each nft token has different set of traits it could be different background it could be different body color it could be different items and based on that information the tools like reality punks or rt tools that calculates reality score can all can scrape all the information that how many traits they are and how many of the nfts have this trait and then calculate the how rare it is in the nft so i'm going to dive a little bit into code but the purpose here is not like i'm not trying to teach you everything about this i just want to show you how easy it is so that anyone can start making smart contract for nft so it's a little small but let me see okay so as you can see this is the most basic form of uh smart contract making uh an nft collection so as you can see it's inheriting in arc721 by uh importing this uh standard from open zipping and by doing so this smart contract already have the set of base functions like token your eye or owner of or set approval for all so you don't have to add anything extra that and if you want and one thing that you have to add is mint so maybe you have heard of the word mint it's basically like creating a token in the smart contract and what it what it does it's so simple you just have kind of check functions you have to check if the sale is active and if the max if you still if there's a still supply in a smart contract and also you have to check if the the value that's given past is uh same as the price that that's set in the smart contract and once the once it's set once it go through this requirements then all you need to do is just call mint function which is also supplied by erc 720 tokyo 20 standard so you can just call that with the parameter of message sender which is the person or address who is minting and also token id and at the end you just increment the supply counter so that uh smart contract knows how many supplies it's still there's there still is so that's that's like really really simple um simple function mean function that i can show but the good news is um the all smart contract in the world is is visible for example if you want to see a bore api cloud smart contract you can just go to easter scan and see how it's written and it's it's so easy to find all the it's because it's open source you can learn from the smart contract you can copy and paste and it's really easy to learn from examples yeah okay cool we're not on the internet but if you went to openc you typed in board a bioclub and you actually looked at each token you'd be able to actually see and maybe we'll be able to get on here and i'll show you that in a second but real quick before actually might work okay perfect so if you get in here just to see any smart contract you would type in something like board api club and maybe my erin that's too slow all right we'll see if we can get that later anyway good news is even if you all know how to program you can still make your own smart contract now and so this is a great site that just came out a few weeks ago and these are completely free tools for anyone to create a smart contract even if you have absolutely no idea how the program and so you can see you can go here you can click create a contract and you can just type in all the different parameters you want the price you know where the images are stored and whatnot click that and then that will go ahead and generate a smart contract for you then you can actually create a minty ui and that will just automatically interface with your smart contract and let anyone mint from it you can even use the arkit to create your own nftr work and metadata and you know programmatically generate thousands of unique images and so with things like this these tools are popping up there are a lot of these things you can you know just get started with no money with uh no development background any of that and so it's pretty exciting time to be in mfts but um yeah that uh that really covers mfts 101 in 20 minutes so again if this didn't answer all the questions you have we run a educational project in the space you're welcome to join our discord at discord.gg catc curiousavies.com is in our way that you can get there and we have a q a service in there where any question you have real time we can get it answered if you ask it using that service we have a whole community of thousands of people who love answering questions and if you want to learn more you can read our article nfts 101 it's on medium just google that you'll find it or you can take our nft course at nasa academy so thank you so much for coming and hope this was helpful