Imagine buying a piece of digital artwork online and getting a unique token (NFT) proving your authority for that token you purchased online. Wouldn’t it be great? Well, this opportunity exists now, thanks to NFTs.
As everyone thinks that Bitcoin is the answer to digital currency, NFTs are now digitally collectable worldwide. Also, thanks to NFTs, the artist has seen a change in their lives as they can sell to the crypto audience. what is nft and how does nft work? the ultimate guide
What is NFT
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NFT means Non-Fungible Tokens (NFTs), generally created on the same technology as cryptocurrency. In simple words, these collectable digital assets are built on the bases of blockchain technology.
The term NFT clearly states that it can not be replaced or exchanges like Bitcoin and Ethereum because of its unique properties. Cryptocurrencies and standard currencies are fungible and can be exchanged or traded for other money.
How Does NFT Work?
- Most Non-Fungible Tokens reside on the Ethereum blockchain, a public ledger that holds transaction records and the history of who has NFTs.
- NFTs are unique tokens with some personal information stored in them.
- Their value or price is set by market or demand so they can be sold like any physical art.
- NFTs data make it easy to transfer among others and validate details of owners.
An NFT is created from digital objects that represent both tangible and non-tangible items as
- Avatars and video game skin
- Graphic Art
Even a tweet counts. Previously Twitter co-founder sold his NFTs for $2.9 million. NFTs are like physical collectors. So instead of getting an actual oil painting, a buyer receives a digital file. Also, they get exclusive ownership too. More importantly, NFTs have only one owner at a time.
How Is NFT Different From Cryptocurrency?
NFTs stand for non-fungible. It uses the same technology as used by cryptocurrencies like Bitcoin and Ethereum.
Cryptocurrencies or physical money can be traded or changed with one another. They are equal in value. For example, one dollar of Bitcoin is always worth one dollar. Similarly, one Bitcoin always remains comparable to one Bitcoin.
On the other hand, NFTs are unequal because every NFT has a digital signature, and NFTs can’t exchange for another.
What Are NFTs Used For?
NFTs and Blockchain technology enable content creators to monetize for themselves. For example, artists do not rely on art houses or galleries to sell out their artwork. Instead of that, they sell directly to customers and get a profit.
Also, artists can program in royalties, so they get a percentage of the commission when their artwork of NFTs is sold to new users. This is an attractive feature for artists to multiply their revenue.
Art is not the only way to make money, and many companies auction their product as NFT for charity purposes. Also, now celebrities from around the world are jumping into NFTs and releasing memorized secured NFTs.
Why Are NFTs Becoming Popular?
NFTs have been around since 2015 but are now becoming popular thanks to several factors. One of the main reasons is the normalization of cryptocurrencies and because of Blockchain Technology. Customers want to get in and hold some digital art as their investment.
When someone purchases content, they get ownership of it. The NFTs get more popular, and their value increases as more are seen on the internet. When the asset is sold, the creator of that asset receives 10% of the profit. Also, that exchange which holds or lists it gets some percentage. The rest all belongs to the owner. Therefore there is an opportunity for revenue generation over the time when it is bought and sold over the time.
Authenticity is the main game of NFTs. Digital collectables are distinguished as they contain unique information, thanks to Blockchain Technology. Creating and circulating fake NFTs doesn’t work like cryptocurrencies, as they can be sold or exchanged because two don’t have the same properties or information and are tracked easily to the original creator.
How To Buy NFT
You understand what id NFTs are and what their advantages of having it. So, if you’re keen on your NFTs collection, you must acquire some key points here.
- It would help if you had an online wallet which allows you to store cryptocurrencies and NFTs.
- Then you need to purchase cryptocurrency, which likely your NFT provider accepts, most probably ETH. You can buy Crypto from platforms like Coinbase, Binance, OpenSea and many other exchanges.
- Once you have made a cryptocurrency purchase, move it to your wallet.
You have to keep in mind that most exchanges charge some percentage of your purchase as a fee.
Popular NFTs Market Place
Once you have funded your wallet, there are many marketplaces to buy NFTs. Some popular Sites are detailed below.
- FOUNDATION: Here, artists must receive invitations from fellow creators to post their artwork. The artist must purchase gas to mint NFTs, which may boost the high calibre artwork. This may mean a high price.
- OPEN SEA: To get started, you need to create an account on the official website and browse down NFTs collections. It is the most famous platform for NFTs right now. It is also known as the largest marketplace and place of rare artwork collections.
- RARIBLE: It is like an Open Sea marketplace allowing artists and creators to sell their NFTs and digital arts.
Although these platforms and creators hold thousands of NFTs, you should research before purchasing from marketplaces.
Should You Buy NFTs?
Just because you can buy NFTs, you have to accept them? No. It depends on you.
- NFTs are uncertain as they don’t have much history, yet be not sure to tell the future of NFTs.
- Also, if you have some spare money, you can buy it or want a collection to save it.
Remember that the NFT’s price depends on what someone wants to pay for it. Their fore demand plays a role in the price of NFTs. Indicators and analyses used in Crypto or stock didn’t recognize the cost of NFTs. It can sell at the low price you purchased or 100x the price you are buying. It all depends on the demand of the buyer.
Do your research, understand all risks and might be a loss in dollars, and then jump in with a plan and strategy.