In this article, we’ll take a look at what are NFTs and what’s all the hype about. Also, how to buy them and even, how to make NFTs yourself. Let’s go!
When an iconic doge meme NFT sold for an unimaginable $4 million in June 2021, people all around the world stopped and took notice. (Source)
So what exactly is an NFT? Is it art? Is it a platform?
What does NFT stand for?
NFT stands for Non Fungible Tokens.
Are NFTs cryptocurrencies?
No. NFTs are digital assets that may be purchased using cryptocurrency but act differently from Bitcoin or Ethereum. Cryptocurrencies like Bitcoin are fungible, meaning all tokens are equal. Each NFT token is unique.
And why are investors putting money into NFTs?
NFT or non-fungible tokens refer to unique assets, like an irreplaceable doge meme or an autographed tweet.
NFTs could be anything from an art piece, domain name, a tweet, music piece, a trading card or just about any digital good that has a value attached to it.
For example, the first tweet from Jack Dorsey, the Founder of Twitter, is an NFT.
And it sold for 2.9 Million Dollars as an NFT! (Source)
Their value lies in their exclusivity. Unlike bitcoins, which are fungible as they can be traded for another, NFTs are unique, one-of-a-kind digital trading assets.
“NFTs are pieces of information on a blockchain that’s represented in an interactive format with visual representation,”Nick Donaraski, CEO of blockchain technology, ORE System
While NFTs have been around since 2014, their popularity is fast gaining momentum as the new-age way to buy and sell digital artwork. In fact, since 2017, over $174 million have been spent on NFTs.
Now, one would imagine digital creations to be abundant in supply, and thus if the supply is controlled, the value would increase given its demand.
NFTs, on the other hand, are digital creations of assets that already exist. Easily accessible to view, one may wonder what is the allure of buying expensive digital art when the same can easily be downloaded or taken a screenshot of.
Managing NFTs is similar to managing cryptocurrencies and may be done by mobile or online app. It’s possible to accomplish this on a smartphone using cryptocurrency exchanges like Coinbase Global Inc. (COIN), Binance, and FTX.
Experts think keeping NFT tokens secure is critical to managing them. NFTs, like bitcoins, are stored in wallets. A unique connection within the wallet enables the material to be viewed or traded.
Buying NFTs allows the buyer to own the original digital art.
The built-in authentication or digital signature serves as proof of ownership, giving the investors bragging rights that some may say are as worthy as the digital asset itself.
What are NFTs & How Do They Work
Powered by blockchain technology, NFTs are encoded and sold online, frequently in exchange for crypto coins.
Usually found on the Ethereum blockchain, these digital assets stored in digital ledgers hold more information that makes them work differently than an ETH coin.
NFTs are developed from digital assets, tangible and intangible items that can vary from art, GIFs, videos, collectibles, avatars, video game skins, music, tweets, and designer shoes.
Here is an example of a music NFT.
NFTs benefit artists and content creators alike. They offer an opportunity to monetize their art without relying on galleries or auction houses.
Instead, NFTs can be directly sold to the customer, allowing them to earn and retain most of the profit for themselves.
The sale can even be structured to earn royalties if their art is resold, a privilege they wouldn’t be offered otherwise.
But NFTs aren’t limited to just artists. Brands such as Charmin and Taco Bell auctioned themed NFT art to raise money for charities.
How to Buy
For investors interested in buying NFTs, one needs access to a digital wallet that can hold NFTs and other cryptocurrencies.
If buying using cryptocurrency, the buyer will have first to purchase crypto coins accepted by the NFT provider.
Certain platforms like PayPal and Robinhood allow people to buy NFTs with credit card payments as well. Once paid for, the NFTs can be transferred from the NFT exchange to a specified digital wallet.
Each platform is home to many NFT creators and collectors, and thus purchases should be driven by research.
In addition, verification processes, security, and transaction fees should be considered when buying NFTs.
Here’s a guide on how to buy NFTs.
NFT and Art
NFTs may be physical or digital assets. This might be anything from intellectual property to a property title. NFTs have expanded into gaming, retail, real estate, and sports. As NFTs’ usefulness grows, so will their acceptance and popularity.
But NFTs are best recognized in digital art. On a marketplace, artists make NFTs. But NFTs may be used in many ways.
NFTs are unique owing to their unreplicable ownership. Limited edition items are more valued. The NFT market is speculative, with individuals purchasing NFTs in hopes that they will be worth more later. People acquire art NFTs because they believe they will increase in value.
Are NFTs Good Investments?
Absolutely. Investing in NFTs is a great way to make money. But like any other investment, it has its share of risks as well.
Here’s a guide on how to make money with NFTs.
It is crucial to remember that the exclusive digital asset commands a price only based on its demand.
One collector may find a particular NFT worthy of millions while another may not.
Their value isn’t determined or influenced by any economic indicators, making it a risky investment.
An investor stands to lose some or all their money if their resale value is low or no one is willing to buy their NFT.
Usually, investing in NFTs is a more personal decision rather than a financial one. If the investor has the money and the NFT has a special meaning, it is worth exploring.
What are crypto NFTs?
The ownership of non-fungible assets such as art, video clips, music, and more are represented by non-fungible tokens or Bitcoins. NFTs are based on the same blockchain as cryptocurrencies but are not currencies.
Why are people buying NFTs?
NFTs allow digital artists to claim ownership of their work. It used to be difficult to make money from files that were freely shared (often without the artist’s consent). But that doesn’t mean NFTs are safe.
People are buying NFTs so that they can add them to their collection, hold it for a while and perhaps resell it for a higher price and make a profit. Kind of like real estate or other unique valuables.
How do I get NFTs?
- Buy Ethereum.
Because most NFTs are Ethereum-based, most NFT marketplaces only accept Eth tokens as payment.
- Connect with OpenSea or another NFT Marketplace. Many online stores sell NFTs.
- Buy the NFTs you like. Simple.
Here’s a detailed guide on how to buy NFTs.
Can anyone make an NFT?
Yes, anyone can make an NFT if you have the right cryptocurrency ownership.
Here’s a guide on how you can make your own NFT.
Like any other investment, it is prudent to research, understand the risks and consider the rewards before investing in an NFT.
Still, at its nascent stage, the growth trajectory of NFTs is being chartered.
Who knows what a simple piece of digital art can be worth tomorrow?
Image source – Ecency
Get started with as little as $10.