In recent years blockchain news has gained a lot of popularity. Information such as Nyan cat being sold as a single unit or Grimes receiving millions of dollars from NFT are all over. Also, Twitter founder Jack Dorsey putting an autographed first tweet for sale as an NFT has been trending.
You might now be wondering what an NFT is and how to get involved in the market. If you are asking these questions, you are in the right place. Well, stick with us as we break the topic down from top to bottom.
NFT stands for non-fungible token. The name still does not clarify, and probably anyone reading this is even more confused.
The term non-fungible token means a unit that helps store data in a blockchain and helps verify the asset to be unique and therefore not substitutable. To expound more, the non-fungible tokens are unique in their way, and they can’t be replaced with anything else. NFTs are used in the complete representation of items and objects such as music, art and video clips. They are transacted online with cryptocurrencies and are encoded with software.
NFTs have been sold since 2014, but their popularity is increasing more and more as it is easier to sell artwork. A total amount of above 100 million was spent on NFT in 2017.
Now we have established and explained what an NFT is, let’s dive deeper into how it works.
There are various examples that can be seen when the market showed a boom, such as Jesse Schwarz, who bought a video clip of Lebron James dunking for 208 million dollars. Though Jesse Schwarz did not own broadcasting rights of the clip, he just owned bragging rights for a few lines of code informing of a digital file.
Another example was when Christie’s auction house got so much attention from people like Mac Cuban, a famous billionaire. Christie’s auction house of the real-world auction has the most rearrest pieces in the world where people get to place their bids and digital collectibles.
How Is an NFT Different from Cryptocurrency Blockchain?
Now we have seen how an NFT works, the next question is, how are they different from cryptocurrencies?
To explain this, we will first look at what a cryptocurrency is. Cryptocurrencies are online currencies that use blockchain technology. This sounds similar to NFT, but there are differences between NFT and cryptocurrencies.
The main difference is that NFT can’t be replaced, and cryptocurrencies can since we had defined some qualities of NFT as being and different from each other. However, In the case of cryptocurrencies, one can move and replace them with each other with no loss even.
This acts as the main difference since the NFT are more unique. They cannot be traded with each other compared to cryptocurrencies that can deal with others with no loss of value.
The NFT is different from cryptocurrencies due to its unique properties and is sold in some websites such as opensea.io, terrible and foundation. NFT can be a strategic market if one is able to invest and choose wisely.
How Does an NFT Work?
As stated earlier, NFT is a way of certifying a digital asset to be unique and cannot be interchanged. Due to this feature, most NFTs are part of blockchains such as Ethereum. Ethereum is a cryptocurrency that helps support blockchains. NFTs exist in blockchains and contain a public ledger that records transactions.
NFT are mined or created from digital art objects and are both tangible and intangible and include art, GIFs, memes, videos, sports highlights, collectibles, virtual avatars, video game skins, designer sneakers, music, and tweets.
NFTs act like a physical collection of digital artworks. So instead of someone getting gold or oil, the buyer will get a digital asset in a file for them to keep, accompanied by exclusive rights. NFT has one owner at a time since it’s unique data and helps to make it easy to verify ownership if one desires to transfer the token between owners.
The owner, who is also the creator, is allowed to store data on the file, such as the artist’s signature if it’s an artwork. There are various things that NFTs can be used for, and the most notable will be highlighted below:
Tickets are some of the popular ways in which NFTs. Tickets are created using non-fungible tokens, and once you make an exchange, there will be a record of that exchange. Due to this, tickets are hard to steal or counterfeit since they contain an original marking that is hard to replicate.
NFTs also help create a digital artwork and record of authenticity and helps in solving counterfeit issues. Once a non-fungible token has been created, it could help create information of what was used to create the items, how far the things have travelled, and what resources were used to create the object.
This includes artwork trinkets and other collectible items that are unique in their unique way. NFTs provide an ideal way of tracking them and making sure they are authentic and perfect.
The gaming industry is another way in which NFTs are used. They provide a one of a kind way of tracking the game’s creators and showing ownership rights of the game. This prevents people from duplicating the game since it has ownership rights.
How NFTs Are Created
If artists are new and want to get paid for their piece of artwork, such as songs, GIFS, games, or artwork, there are various ways in which you would follow to help create your NFT but getting started, and you will have to understand multiple things: –
Some blockchains highly support NFT, and the most popular blockchain is Ethereum.
For one to transact, one will require a cryptocurrency wallet, and the most popular is Ethereum (ETH).
A person can create and sell digital assets on the NFT market platform as long as they have proof of ownership.
Where Can I buy NFT Tokens?
Now we have arrived here, we have all seen how good the NFT market is. For you to enter the market, some items will be required. Firstly, everyone will need a digital wallet that will allow one to store the NFTs. The buyer will be required to purchase cryptocurrencies like Ether that will help them to buy the NFTs.
Ether (ETH), a cryptocurrency, is purchased on crypto exchanges like Binance and Coinbase. After purchasing them, the buyer will then be able to move them to the wallet. Secondly, after purchasing cryptocurrencies, there are famous places in which one can buy the NFTs.
Most Popular Marketplaces
- Opensea.io: This is one of the best NFT marketplaces that deal with rare items. To get started, the buyer has to create an account, and you will find the NFT collections. The website is fast and efficient, and one can trade with sellers using cryptocurrencies.
- Rarible: Same as OpenSea, rarible has a more democratic feature where the artist is allowed to weigh on a feature like fees and rules in the community
- Foundation: In these platforms, the artist will require an invitation from another pre-existent artist in the platform to post their art. Their exclusivity is vital in order for them to provide quality NFT. An example is the creator of Chris Torres Nyan cat sold the NFT on the platform. The foundation exclusivity may also mean a good thing as it may help increase demand over time.
Despite the exclusivity of a new artist who wants to sell in the NFT marketplace, one is advised to do their research to avoid falling into temptations of scammers as some artist’s work has been sold without their permission.
How to Buy an NFT
The process of buying an NFT is straightforward to anyone who wants to purchase them. Most NFT functions like eBay, where one has to bid for the product they wish to purchase, and one with the highest bid gets it. The NFT price is usually informed of ether currency as people auction for it. For example, some artists place their digital collectibles in the market for buyers to bid for the product.
However, when purchasing the Nft, one will require an Ethereum blockchain which is easily bought in Coinbase, among other websites that have a cryptocurrency wallet. The purchasing process involves bidding for the product where the highest bidder, upon closing time, gets the authentic product.
Some Reasons Why One Should Buy an NFT
The most often asked question is whether it’s okay to buy an NFT art. According to Yu, an investor, she said that “NFTs can be dangerous since their future is very unsure, and most people don’t yet have enough or the right data to gauge their performance.”
She also added. “it is important to give them a little more time to gauge their performance before investing in them to avoid losses.” As such, NFT can be a double-edged sword, and it can hurt or help improve you, but the most important thing is not to risk it all.
How to Make an NFT
Making an NFT is not very hard at all; one will only need a music file picture or video that you will upload in a pre-loaded cryptocurrency wallet with your Ethereum blockchain. After uploading it, one will choose which NFT website they would like to create and upload their NFT. Most websites have different instructions that one will have to follow, but they are straightforward. The seller will need to select the sale price as they put their NFT up for auction.
NFT is an upcoming market with the probability of going to outstanding heights. The non-fungible token is a tokenized means of paying for artwork, whether it’s a meme, art, or Gif. The NFT provides a unique way of identifying the artwork. In case one wants to pay, whether in bitcoin or cryptocurrency, the transfer will be easy. Also, NFTs helps identify the digital asset as unique and cannot be replicated to another person.
Before investing, you must do the necessary research to know the current economic trends and features. However, it is a good way for a digital artist to sell artwork in the market, but care must be taken like with all things.