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NFTs or Non-Fungible Tokens are digital items or you can say digital assets that can be bought and sold using the BLOCKCHAIN TECHNOLOGY. Cryptocurrencies, which use a digital public record of transactions called a blockchain, are fungible. But NFTs are not fungible, making them a different type of asset.
But are NFTs worth the money—or just the market hype? Some experts say they’re a bubble poised to pop, like the dotcom craze or the Beanie Babies. Others believe NFTs are here to stay, and that they will change investing forever. NFTs are partially overhyped but have an equal amount of potential.
The potential of NFTs goes far beyond eccentric digital artworks. NFTs are also used for digital land purchases in virtual worlds and for next-generation music ownership, licensing, and publishing. Some observers see a future in which NFTs offer access to special sales or limited-edition products.
If you are interested and want to explore more about what an NFT is, then you are in the right place. Today, in this post we are going to discuss – what exactly is NFT, what are these digital assets, and how they are traded, and more important things you should know about this NFT market.
What Is NFT (Non-Fungible Token)?
NFT stands for the non-fungible token, which basically means that it’s a one-of-a-kind digital asset that belongs to you and you only. A non-fungible token (NFT) is a non-interchangeable unit of data stored on a Blockchain, a form of digital ledger.
NFT ledgers claim to provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. NFTs do not restrict the sharing or copying of the underlying digital files and do not prevent the creation of NFTs with identical associated files.
- NFT is a digital asset that is neither be replaced nor interchanged because it has unique properties. It represents internet collectibles like art, music, and games with an authentic certificate created by Blockchain technology that underlies Cryptocurrency.
- NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated. It can be used to represent real-world items like artwork and real-estate.
Examples of NFTs:
- Non-fungible tokens (NFTs) can digitally represent any asset, including online-only assets like Digital Artwork, Music, Video, Tweets and Real Assets such as Real Estate etc.
- CryptoPunks – a non-fungible token (NFT) collection on the Ethereum Blockchain, is a remarkable example of NFT. It enables you to buy, sell and store 10,000 collectibles with proof-of-ownership.
- Other examples of the assets that NFTs can represent include in-game items like avatars, digital and non-digital collectibles, domain names, and event tickets and so on.
The NFT can be associated with a particular digital or physical asset (such as a file or a physical object) and a license to use the asset for a specified purpose. The most popular NFTs right now include artwork and music, but can also include videos and even tweets.
How Does The NFT Work?
At a very high level, most NFTs are part of the Ethereum Blockchain. Ethereum is a cryptocurrency, like Bitcoin or Dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH Coin.
- NFTs are individual tokens with valuable information stored in them.
- NFTs can really be anything digital (such as drawings, music, video clip, some artworks etc), but a lot of the current excitement is around using the tech to sell digital art.
- Thus, it holds a value primarily determined by market and demand and can be bought and sold just like any other physical types of asset.
- NFTs’ unique data makes it easy to verify and validate their ownership and the transfer of tokens between owners.
Specific token standards have been created to support various blockchain use-cases. Ethereum was the first blockchain to support NFTs with its ERC-721 standard and is currently the most widely used.
ERC-721 was the first and most common standard for representing non-fungible digital assets on the Ethereum blockchain. Many other blockchains have added or plan to add support for NFTs with their growing popularity.
Examples of Other blockchains that Support NFTs:
1. BITCOIN CASH
Bitcoin Cash supports NFTs and powers the Juungle NFT marketplace. It is a cryptocurrency that is a fork of Bitcoin. It is a spin-off or altcoin that was created in 2017. In November 2018, Bitcoin Cash split further into two cryptocurrencies: Bitcoin Cash and Bitcoin SV.
Cardano is an open-source public blockchain platform for changemakers, innovators, and visionaries, with the tools and technologies required to create the possibility for the many, as well as the few, and bring about positive global change.
The GoChain network is the fastest, most sustainable, web3 compatible blockchain, which bills itself as ‘eco-friendly’, powers the Zeromint NFT marketplace and the VeVe app.
Tezos is a blockchain Tezos is a blockchain network that operates on a proof of stake and supports the sale of NFT art. It is a decentralized open-source blockchain that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts. The native cryptocurrency for the Tezos blockchain is the ‘tez’, which has the symbol XTZ.
Non-fungible tokens (NFTs) VS Cryptocurrency
It is important to distinguish (Difference) between cryptocurrency and non-fungible tokens. Although both are based on Blockchain Technology, the fundamental differences can help us to understand how NFTs work.
The key difference between NFTs and cryptocurrencies is that currencies allow fungible trade, which means anyone can create cryptocurrencies like Bitcoin that can be exchanged for other Bitcoins. But, the NFTs are designed to uniquely restrict and represent a unique claim on an asset. You cannot do so for an NFT. A non-fungible token is tied to one particular digital asset and cannot be replaced.
Non-fungible tokens or NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can be used as a medium for commercial transactions.
In short, Cryptocurriencies are Fungible and NFTs are Non-Fungible. This is the main key difference between NFT and Cryptocurrency.
The Uses of NFTs (Non-Fungible Tokens)
As we’ve mentioned already, a non-fungible token (NFT) is essentially a certificate of ownership for a digital asset. The value comes from the collectability of that asset, as well as its potential future sale value.
NFTs can be sold and traded. People who like to collect artwork often use NFTs. Here we will discuss some more uses of NFTs.
1. Digital Content or Digital Asset
The most significant use of NFTs today is in digital content and digital asset. NFTs are typically used to buy and sell digital artwork and can take the form of GIFs, tweets, virtual trading cards, images of physical objects, video game tokens or character skins, virtual real estate, and more.
2. Gaming Tokens and Gaming Items
Through NFTs, gamers can save in-game purchases, sell them to other players, or move them into other supported games. You can buy gaming items or some special skills for your game, and when you’re done with that, you can recoup your money by selling them.
3. Domain Name Ownership
With blockchain domain systems, owners can control their domains using private keys. Blockchain domain NFTs enable easy trading as well as customizable domain names.
NFTs provide your domain with an easier-to-remember name. This works similar to a website domain name, making its IP address more memorable and valuable, usually based on length and relevance.
4. Fashion and Wearables
Luxury brands are now coming to the NFT space. The merge of technology like NFT and augmented reality with physical couture has unveiled a new line of digital apparel that will soon overtake industry enthusiasts.
5. Real-World Assets
Since NFTs can be linked to real-world assets, they can be used to prove ownership. NFTs have platforms for selling digital real estate in both the virtual and real worlds.
Even celebrities like Snoop Dogg, Shawn Mendes, and Jack Dorsey are taking an interest in the NFT by releasing unique memories, tweets, and artwork and selling them as securitized NFTs.
Why Are NFTs Becoming Popular?
2021 was undoubtedly the year of Bitcoin and Cryptocurrencies, which took the world and Wall Street by storm. But even more, it was the year when non-fungible-tokens (NFTs), which were considered obscure as recently as many months ago, went truly mainstream. NFTs have actually been around since 2015, but they are now experiencing a resurgence thanks to several factors.
Owning an NFT creates the permanence and ownership experience that we enjoy with physical items, but for digital assets. First and perhaps most obviously, are the normalization and excitement of cryptocurrencies and the underlying blockchain frameworks. And that’s become a major draw for many people, especially those concerned about the influence of major media and internet companies.
When someone buys the non-fungible token, they gain ownership of the content, but it can still make its way over the internet. In this way, an NFT can gain popularity — the more it’s seen online, the more value it develops.
These ongoing trends were compounded by the effects of the global pandemic. When people were forced to shelter in place, they began to search for digital alternatives for the community, connection, and meaning. NFTs offer an innovative way to engage directly with things we are passionate about, without leaving home.
How to Buy and Sell Nfts?
Investing in Non-fungible tokens (NFTs) is not similar to investing in Cryptocurrencies. Every NFT is different, and it will come with different valuations and pricing. So, to buy and sell NFTs, you need some form of media attached to them to increase their valuation.
The NFT market continues to grow as one of the industry’s most prominent sectors. Here, we will discuss how to buy and sell these digital assets.
How to Buy NFTs?
Some might say that buying portable network graphics (PNG) or graphics interchange format (GIF) files for thousands or millions of dollars seems irrational. When collectors buy an NFT or NFT arts, they purchase something unique and scarce — the ultimate criterion for every true collector — even if an image or video clip, tweets, or piece of music has been shared online hundreds of times.
- You need to go to the site of the platform of your preference and register to open a wallet with them. Because you’ll need a Digital Wallet (Like Metamask, Coinbase Wallet, AlphaWallet, Math Wallet, Enjin, Trust Wallet, etc.) that allows you to store your NFTs and cryptocurrencies.
- Then you need to purchase some cryptocurrency depending on what currencies your NFT provider accepts, most likely Ether.
- Choose the marketplace you want to buy the NFT from. There are multiple marketplaces for NFTs. You can use platforms like OpenSea, Coinbase, Kraken, PayPal, etc., to buy cryptocurrencies.
- Then you will be able to move it from the exchange to your wallet of choice.
Keep in mind that most exchanges charge at least a percentage of your transaction as fees when you buy crypto.
How to Sell NFTs?
Ether and other ERC-20 tokens are the most common cryptocurrencies you can sell your NFTs for, however, some platforms only support the native token of the blockchain they were built upon. We have already covered the process of buying NFTs. So, here we will discuss how to sell the NFTs.
There are two main ways of selling NFTs or NFT Artworks:
1. Selling a Minted NFT
This is the way for content creators. When you mint an NFT, you will be creating something entirely new. You can mint from a new digital online project or you can convert items you have created like art, memes, poems, or music into NFTs. You can create your own NFTs and then auction them off or sell them in other marketplaces.
One can mint NFTs through sites such as OpenSea, SolSea, etc. After minting the NFT, one can list it on any of the sites for sale.
2. Trade the Existing One
Selling NFTs isn’t just for digital creators. Some collectors trade from their collection of NFTs. If you have previously purchased an NFT from a creator or from another collector on a marketplace, you can list those for sale as well.
In this process, you can buy an existing NFT piece and then sell it in another marketplace to make money and make a huge profit.
Top 5 Most Expensive NFTs
NFTs are unique digital objects that bear a certain value based on the object’s uniqueness. Here are some of the most expensive NFTs sold.
5. CyptoPunk #3100 — $7.67 Million
The CryptoPunks is one of the earliest NFT collections made, way before the NFT collections saw their boom in the market. The CryptoPunks was released in 2017 on the Ethereum Blockchain.
On March 11, 2021, just one day after #7804 sold, #3100 became even more expensive than its brethren. The CryptoPunk #3100 was purchased on March 11, 2021, for 4,200 ETH which is approximately US$7.67 million.
4. CyptoPunk #7523 — $11.75 Million
The CryptoPunk #7523, much like the earlier CryptoPunk, is of the alien variety with blue-green skin and is wearing a medical mask. It is also part of the Alien series, though it has a few different accessories compared to its #7804 and #3100 siblings.
CryptoPunk $7523 was purchased by DraftKings’ shareholder Shalom Meckenzie for $11.75 million. This NFT has a red beanie, a gold earring, and a face mask.
3. Beeple’s HUMAN ONE — $28.98 Million
BEEPLE is a regular among the most expensive NFTs ever sold, actually occupying the top three spots in this list. Beeple’s Human One NFT is a hybrid digital and physical artwork by Beeple, which sold for US$28.9 million, auctioned off as part of Christie’s “21’st Century Evening Sale” on November 9.
Beeple describes his latest NFT art as “The First Portrait of A Human Born in the Metaverse.” The interesting thing about Beeple’s “Human One” is that he aims to change it over the course of his lifetime.
2. Everydays: the First 5000 Days — $69.3 Million
Everydays: the First 5000 Days is a digital work of art created by Mike Winkelmann, known professionally as ‘BEEPLE’. Another Beeple piece and the most expensive NFT ever sold to one sole owner — and there’s a good reason for it.
The work is a collage of 5,000 digital images created by Beeple and was purchased by Vignesh Sundaresan, a Singaporean cryptocurrency investor. He paid 42,329 ETH for the artwork.
1. Pak’s “The Merge” — $91.8 Million
Pak is another big name in the NFT space, having created some of the most iconic artworks out there. The artist’s actual identity remains a complete mystery, but it has not prevented him from making a massive presence in the digital art industry space.
‘The Merge’ officially became the most expensive NFT ever sold on December 2, 2021, with almost 30,000 collectors pitching together for a total cost of $91.8m. The price was a record for an artwork sold publicly by a living artist, according to Nifty Gateway.
There is no doubt that NFTs are growing more and more popular as time goes on. And maybe within the next few years, other NFT artworks will come and beat – ‘The Merge’ artwork, which was sold on 91.8 million.
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