NFTs are the next big thing in Crypto and Blockchain Technology. They are the ‘new oil”, and everybody seems to be talking about them and investing.
Perhaps you’ve seen NFTs making news and headlines, and you’re unsure what they are.
An NFT just sold for a million dollars, and you are thinking, “What’s going on here?” What’s special about these arts, and how are they different?
This article will be your guide as we demystify NFTs, what they are and why they are unique and different. Are they worth the money? Or the hype?
Let’s get started…
What are NFTs?
NFTs are non-fungible tokens used for representing ownership of unique items. They are digital assets such as art, collectibles, virtual assets and gaming that are traded on blockchain platforms such as OpenSea and Rarible.
NFTs are interchangeable digital assets that are exchanged over the internet. They are popular today because they provide a unique marketplace for digital assets. They also allow users a flexible approach to storing, controlling and protecting information related to their identity.
NFTs transform digital artwork or collectibles into one-of-a-kind and verifiable digital asset which can be traded on the NFT marketplace. Each NFT comes with unique information such as ownership and transaction details.
If you can convert something into a digital form, then it can be an NFT. Everything from your photos, GIFs, Videos, drawings or in-game items.
However, what makes NFT unique and different from other digital forms is that it is supported by Blockchain technology. Blockchain is a distributed ledger where transactions are recorded.
Think of Blockchain as your bank passbook, except that, in this case, all transactions are transparent and visible to anyone. However, they cannot be modified or changed by anyone once recorded.
How Are They Different From Cryptocurrency?
NFTs and Cryptocurrencies are built on Blockchain, and that is where the similarity ends. They are different in their personalities.
Fiats and cryptocurrencies are fungible, which means they are entirely interchangeable. They are equal in value, and you can exchange and trade them for one another.
One bitcoin will always be equal to one bitcoin. One Ethereum will always be equal to one Ethereum. If you swap 1 BTC for another 1 BTC, nothing changes. You still have one BTC worth of value.
Let’s put it into perspective. If you owe me a token worth $1000, you can pay me back in any form or denomination, and I wouldn’t care less. 2 $500, 5 $200 or 10 $100. I don’t mind how you give me back, as long as I have my $1000.
But NFTs are different. They are non-fungible, which means they are unique. Each has a digital signature that ensures it’s impossible to be exchanged for or equal to another.
They represent a 1 of 1 original asset such as a unique work of art or a specific number of copies in a limited edition. And as such, NFTs are perfect for storing real-world value.
What Are NFTs Used For?
NFTs and Blockchain Technology avails artists and content creators the luxury to monetize their assets. Artists do not need to rely on auctions or galleries to sell their digital art.
Artists can sell their art as NFT to consumers while keeping more of the profits. They can also program in royalties to get a certain percentage on the resale of their art to a new owner.
Asides from Art, you can also make money with NFTs. Some brands and companies have auctioned off themed NFTs to fundraise for charity.
If you want to buy an NFT, a term that you will often hear is minting. In simple terms, Minting means the process of creating a new NFT that did not exist before.
You can also explore NFT minting if you have something unique to represent through unique crypto assets.
For instance, if you have a groundbreaking study or finding in research work and you want to protect your findings, you can do so by minting it as an NFT. This NFT will verify beyond any reasonable doubt that you’re the true owner of the study.
Who can buy NFTs?
Anybody can buy NFTs. The only prerequisite is having a cryptocurrency wallet, and you can comfortably buy NFT. You don’t need any other documents of some sort.
A cryptocurrency wallet and an NFT marketplace where you can buy and sell NFTs. Popular NFTs Marketplaces include Opensea, Rarible, Binance and Crypto.com Marketplace.
NFTs are primarily used with digital art today, but there may be other future applications. People enjoy collecting physical stuff, and there is no equivalent to it in the digital world. NFTs are a means to bridge the gap.
People have argued for years about putting a monetary value on art. NFTs might just be rounding off the debate.