Recently, many people have been asking me what NFTs are, and I think it's necessary to have a good discussion on this topic. In simple terms, an NFT is a non-fungible token, which in Chinese is called an不可替换代币 (non-replaceable token). This concept is actually easy to understand: it refers to each being a unique digital asset, such as artworks, game items, virtual real estate, and similar things, which cannot be exchanged with each other.

In comparison, Bitcoin, Ethereum, and similar tokens are fungible tokens; one BTC is exactly the same as another BTC and can be exchanged. Both NFTs and these fungible tokens are issued based on blockchain technology, but they use different underlying standards. NFTs use standards like ERC-721 and ERC-1155, while fungible tokens use ERC-20 and BEP-20.

The history of NFTs is actually quite short. In 2017, a project called CryptoKitties appeared, which was extremely popular at the time. Users were trading and breeding them wildly, even clogging the Ethereum network. The most expensive one was called Dragon, which sold for $110k. After the hype subsided, NFTs didn't die out; instead, they gradually expanded into fields like art, entertainment, and sports. In 2018, a digital artwork sold for $6.9 million, setting a record at the time.

The real explosion happened in 2021. The emergence of blue-chip projects like CryptoPunks, Bored Apes, and Art Blocks attracted many well-known artists, celebrities, and brands into the NFT market. During that period, projects appeared in dazzling numbers, with various forms. However, I noticed an interesting phenomenon: the bull market in NFTs basically synchronized with mainstream cryptocurrencies like Bitcoin, just with some time lag.

As for the current market situation, honestly, it's a bit cold. According to data, the total market cap of NFTs is declining, trading volume is shrinking, and even the floor prices of some blue-chip NFTs are hitting new lows. But this round of market has a different feature: NFTs are starting to connect with the real economy. Especially in the direction of physical asset on-chain, I think it could very well become a future trend. Physical assets can be traded quickly and conveniently through NFTs, and NFTs can gain real application value, with both sides promoting each other. Now, calligraphy, paintings, valuable items, and real estate are all exploring on-chain solutions, which should be a promising direction for the next bull run.

Regarding how to choose promising NFT projects, I think many people are easily confused by superficial phenomena. Indeed, good-looking, strong teams, and celebrity endorsements are plus points, but the key is to look at the business model. If a project relies only on hype and has no real ability to generate value, it’s very risky. For example, Jay Chou’s endorsement of the Fantasy Bears is a typical negative example, which ended in chaos. In contrast, why can Bored Apes stay stable? Because they continuously create value with their IP, giving investors hope.

If you find an NFT project supported by a genuine business model, you can consider holding it long-term, but you need patience because such projects take time to accumulate and attract users. Honestly, there are very few such projects in the market; most projects have a short lifecycle, suitable only for short-term speculation, at most half a year, and never hold for the long term. Many project teams just want to quickly harvest a wave and then disappear.

If you don’t know how to judge a project, I suggest checking the official website, forums, or community groups on Telegram and Discord. The more you read, the more you will develop the ability to identify good projects. Especially pay attention to any signs of contract minting or scams; if you see such warnings, just give up. The farther you stay away, the better.

Regarding trading platforms, there are currently about 40 NFT trading platforms. The top three are Blur, OpenSea, and X2Y2. Blur’s advantage is strict review standards and high-quality works; it currently doesn’t charge fees, but it’s a new platform with relatively small user base and liquidity. OpenSea’s biggest advantage is its large user base, high trading volume, and good liquidity, but it’s highly centralized and has high fees. X2Y2 is a decentralized platform with good privacy and security, but it also faces a small user base. Choose according to your needs: if you want safety, use X2Y2; if you care about fees, use Blur or X2Y2; if you just want to buy new projects, use OpenSea.

Finally, a few reminders. First, NFT liquidity is relatively poor; buying may mean waiting a long time to sell, and for non-blue-chip projects, there may be no buyers at all. So if you want to do short-term trading on the secondary market, be mentally prepared—you might not be able to sell or may have to sell below the floor price. Second, new projects often issue in blind boxes, which makes it easy to be scammed by fake goods. Always verify the contract address on the official site; many fake projects exist, and some people end up opening fake NFTs, losing ETH. Lastly, very importantly, if you hold NFTs in your wallet, never sign any authorization to third-party sites casually, and avoid using NFTFi products lightly, as assets can be transferred or destroyed easily. Once that happens, you can never recover them.