Understanding modern technology and jargon is difficult, especially when it’s crypto-related. I’m here to explain the methods of buying NFT’s on Cardano in very simple terms and hope to identify which approach is best.
The Situation
On March 1st 2021, Cardano updated with the Mary upgrade allowing creators to mint NFT’s on the blockchain.
The first NFT minted were 100 Berries which were gifted to various people.
This opened the doors for sales, with Cardano Kidz being the first to sell and distribute on April 2nd, 2021.
Although the time between purchasing and receiving the NFT has been reduced, the method of minting on Cardano is much the same as it was back then. It requires a lot of trust on the purchase’s behalf. Trust that’s hard to gain when stories of rug-pulls and scams are common.
The Metaphor
A transaction can be summarised as trading one item for another between two people.
So let’s move away from the digital aspects of crypto and pretend we want to do our transaction in a Chinese restaurant called “Wok and Rug-Pull”. Seems trustworthy right?
I’ll be the seller and this is my establishment, you can call me Jade. I have the best-looking collection of Golden Dragons this side of the block… chain.
I’m sitting at a round table with my back to the door. You walk in and sit down opposite me, noticing that I look somewhat intimidating wearing a Chinese mask. This might seem strange but many creators chose to hide their true identities.
There is a Lazy Susan between us. Of course there is, this is a quality Chinese restaurant, doing a legitimate business transaction.
Psst, I apologize if this comes across as culturally insensitive. That's not my intention. I created this article and metaphor around the Lazy Susan. Just happens that these are often found in Chinese restaurants.Scenario One: The Hustle
I whisper the price of 100ADA and point to the Lazy Susan. You hesitate but the desire to own your very own Golden Dragon is far too great. Placing your hard-earned money on the turntable, you rotate and the money stops on my side. I pocket it and before you bat an eyelid, I’m up and out the door. You just got scammed… sorry!
If this was real, my heart goes out to you. Unfortunately, there are bad eggs out there, not only in crypto but in all domains. It’s important to exercise caution in all types of transactions.
Let’s pretend this is a pick-a-path book and your finger is on the page that leads here, turn back and start again.
Scenario Two: The Trade
Mask still on, I point to the Lazy Susan and whisper 100ADA. You place the money on the turntable and rotate while telling yourself that you must have that Golden Dragon. Surely this time will be different? I pick it up, count it, and put it in my trench coat pocket. My hand slowly comes back out holding something. The lighting is bad and you can’t tell what it is. I place it on the turntable and rotate. As it stops on your side, you see it is… the Golden Dragon.
You stand up and leave feeling relieved and happy. The transaction was successful and you received the item.
Leaving the metaphor for a second, this is the standard NFT transaction on Cardano and has been since day one. If we wanted to be precise, it’s two transactions. First, you gave me the money, then second I gave you the NFT.
Now if you come from across the street on Etherium avenue, you would say… “why not use smart contracts so the transaction is more honorable?”
The Smart Contract
On September 12th we saw Cardano get another major update called Alonzo. This brought smart contracts to Cardano allowing us to write code that executes on the blockchain. This could act as a trusted middle man to the previous transaction so I don’t scam you.
Leaning back into the metaphor, we’ve sat at the table once more. I whistle to the waiter and he walks over. He’s our smart contract; an intelligent yet complicated man wearing black, red, and gold trim. No need for Lazy Susan, he seems better suited for the job.
I whisper the terms of the transaction to him… “100ADA for the Golden Dragon”, give him a wink and hand him the Golden Dragon. He leans over to you and asks for 100ADA. The uniform is legit and he looks the part, so you trust him and hand over the money.
At this moment he passes the Golden Dragon to you and the ADA to me. Another successful transaction, although it costs a little bit more to do this as he expected a tip for his time.
If fortune wasn’t on your side, the result could have been very different. What was that wink about? Has he been audited and declared trustworthy? There is a chance I talked to him before the transaction and informed him the wink meant to swop the Golden Dragon for a fake or to snatch your Rolex as you hand him the money.
Before confirming the transaction, double-check what he’s asking for and only agree if it’s an establishment that you 100% trust. People have signed smart contracts only to find it later cleaned out their entire wallet.
On reflection, Lazy Susan did a similar job and it seems a little overkill to have him. Better suited if the price was negotiable or the transaction was a bet on the message in a fortune cookie?
The Better Option
Let’s bring back Lazy Susan but this time we’ll tweak the process. This improvement is what people call multi-sig transactions.
Drifting back into the metaphor, we sit opposite. The waiter has been fired, he’s obsolete and costs too much.
I whisper the terms of the transaction to you… “100ADA for the Golden Dragon”. I place the Golden Dragon on the turntable. The lighting is bad and you can’t tell what it is but the shape and everything about it looks correct. I purposely don’t rotate the turntable but point at your side. You get the hint and place your money on there too. We both nod, then rotate the turntable 180 degrees getting what was promised to us in the transaction.
You stand up and leave feeling very happy. All anxiety was removed as there was trust established from the very start. Not only that but everything is done in one rotation (transaction). This is way more efficient and means Lazy Susan can be lazier than she already is. Her ball bearings are pleased as is the next person waiting to be seated.
This Chinese restaurant is no longer the “Wok and Rug-Pull”, its the “Wokking Good Time”.
