NFT Investing for Prudent Investors

Explore the middle ground between hype and fraud in NFT investing, assess the technology’s potential across industries, and perform due diligence with risk and liability in mind.

Explore who should take this NFT investing course and learn how to perform proper due diligence for NFT purchases.

Explore what NFTs are, the token versus asset distinction, and the hidden liabilities, then build a due diligence framework covering issuance, markets, pricing, risk, and taxes.

Clarify what an NFT looks like by defining it as a blockchain token linked to an asset via a smart contract, a public address, a token id, and asset metadata.

Explore the difference between fungible and non-fungible tokens, comparing ERC-721 with ERC-20 and highlighting unique token IDs and how asset metadata uniquely identifies items.

Discover how NFTs represent both off-chain assets, such as art and collectibles, and on-chain assets like shares in a DeFi trading pool or virtual land in the Metaverse.

Describe NFTs as blockchain tokens that point to assets, existing only on blockchain networks, best represented by their smart contract, token ID, and asset metadata.

The lecture demonstrates that multiple NFTs can share the same asset-metadata and image by minting repeatedly on a test network, using mintNFT and public marketplaces.

Explore the risks of minting NFTs with stolen or counterfeit assets and how artists' work is often repurposed without consent, including viral posts converted into NFTs.

Explore how NFT tokens remain intact while the linked asset or metadata can be swapped or deleted, creating dead links, and why smart contracts need an oracle to verify links.

Explore how multiple NFT platforms and networks create an interoperability problem that hinders asset diligence. See why assets minted on Ethereum, Flow, Ronin, and Tezos may appear non-unique across NFTs.

Explore how the uniqueness and scarcity of NFTs depend on asset owners and centralized authorities who attest that only rightful owners can create NFTs and that assets are scarce.

Understand what you own when you buy an NFT: the token, not the underlying asset, unless stated. Recognize common misunderstandings about NFT transactions, illustrated by the Mona Lisa example.

Explore what rights accompany NFT ownership, distinguishing usage rights from copyrights. Licenses like CryptoKitties grant limited commercial use while keeping IP rights with the creator.

Buying an NFT yields a derivative, not the asset, unless a document states otherwise. Usage rights may exist, but ownership and intellectual property do not transfer; price reflects derivative value.

Explore copyright restrictions in NFT ownership, including limits on altering art or using it to market third-party products, and issuers' liability-limiting terms; buyers should review these limitations carefully.

Learn how NFT issuers restrict monetization or transfer, from Dapper Labs’ $100k annual cap to the Cryptopunks saga, with limitations built into smart contracts or off‑chain terms.

Perpetual royalties may trigger payments whenever an nft is resold or monetized, coded in smart contracts or off-chain terms, creating a tax-like liability for holders.

Explore how nfts involve on-chain and off-chain terms, with rights and liabilities embedded in smart contracts and sometimes unclear terms that require investors to dig deep amid cryptopunks-like surprises.

Explore how distributed ledgers store data across many nodes, bypass centralized servers, and rely on consensus to verify the authenticity of all transactions.

Explore how blockchains act as distributed ledgers by creating blocks that record transactions over time periods through consensus, then share encrypted block data across the network as a bookkeeping file.

Explore how smart contracts are self-executing programs on blockchain networks, deployed at addresses, that can hold crypto assets and are not owned or controlled by anyone, yet trigger programmed operations.

Explore how tokens on a blockchain represent value as assets, fiat currencies, commodities, voting rights, shares in liquidity pools, or artwork usage rights, and distinguish fungible from nonfungible tokens.

Discover how IPFS enables off-chain NFT storage by using a content fingerprint, a CID, so the NFT directly references data across distributed nodes rather than an HTTP link.

Explore how public addresses and private keys secure blockchain ownership, how transactions are signed, and why wallets store private keys to safely manage crypto assets.

NFTs enable unique, immutable identities with asset metadata, self-executing smart contracts, and immutable transfer histories on distributed ledgers, allowing ownership representation of physical assets, digital arts, and collectibles.

Highlight how collectibles dominate the NFT market, accounting for about half of total sales volume. Drive value through scarcity with digital trading cards like Cryptopunks and Bored Apes Yacht Club.

Learn how gaming assets shape NFT markets, with user-created characters, weapons, and apparel trading in blockchain games, accounting for 30% of volume and the play-to-earn boom led by Axie Infinity.

Explore art NFTs as the next largest segment, with Beeple's Everydays the 5000 first days selling for over $69 million and Artblocks dominating alongside Superrare, Doodle, Christie's, Foundation, and Sotheby's.

Explore metaverse assets, which make up about 3% of the NFT market, including virtual real estate and collectibles in The Sandbox, Decentraland, CryptoVoxels, and NFT World.

Explore how NFTs deliver utility and finance beyond ownership, including domain names via Ethereum Name Service, with market leaders like VeeFriends, Nouns, and SquiDAO.

Explore centralized issuance of NFTs, where trusted issuers verify asset authenticity and may serve as custodians for assets, as seen with Larva Labs, Dapper Labs, and Sotheby's and Christie's.

Learn how decentralized issuance lets anyone mint NFTs on platforms like Opensea or Rarible without identification or verification, by connecting a wallet and paying the gas fee.