Last Updated on May 10, 2023
I don’t know about you but I have been hearing a lot about NFTs lately and the things I hear are quite extraordinary. I hear about people paying Benz money for pixelated doodles and animated GIFs… what? I mean there are some good art pieces on the platform but a lot of it just seems ridiculous. Quitting your job to become a digital artist is all of a sudden, very tempting. However, there is a lot… just to be on the safe side.
NFTs are presently dominating the world of digital art and collectables. The lives of digital artists around the world are being transformed as a result of massive sales to a new crypto-audience. Even celebs are jumping on board as they see a new platform to interact with their audience.
However, digital art is merely one application of NFTs. They can be used to indicate ownership of any one-of-a-kind asset, such as a deed for a digital or physical item.
So what exactly is an NFT?
An NFT is a digital asset that depicts real-world elements like art, music, in-game items, and films. They’re bought and traded online, often using cryptocurrency, and they’re usually encoded with the same software as many other cryptos. They can only have a single official owner at a time and are secured by the Ethereum Blockchain which means no one has the ability to change the ownership record or create a new copy of an NFT.
NFT stands for non-fungible token. This means that it cannot be readily interchanged. It’s like how you cannot exchange ‘The Mona Lisa’ for another Mona Lisa. There can only be one original Mona Lisa. Unlike cryptocurrencies like bitcoin which can be traded for their value however many times, each token contains a one-of-a-kind digital identifier that cannot be copied, swapped, or subdivided, which is stored in a blockchain and used to verify authenticity and ownership. Because of this, NFTs have evolved into collectable digital assets with actual worth, much like traditional art.
How do NFTs work?
Earlier, I mentioned that each NFT has a unique digital identifier that is stored in a blockchain. Well, NFTs were first introduced on the Ethereum blockchain, but they are currently supported on other blockchains like FLOW and Bitcoin Cash. Whether the actual file is a JPG, MP3, GIF, or something else, the NFT that specifies its ownership can be acquired and sold just like any other artwork – and the price, like real art, is primarily determined by market demand.
This not only inhibits the copying of an NFT, but it also eliminates false claims of ownership or even claims to the development of the NFT.
How are NFTs created?
The process of creating a nonfungible token is known as minting. Through this procedure, digital assets are converted into blockchain assets. NFTs, like metal coins, are minted as soon as they are created. After the process, the digital item becomes tamper-proof, more secure, and difficult to manipulate and it may be bought, traded, and digitally traced when resold or collected in the future.
It is important to note that if you want to start creating NFTs, you need to have a cryptocurrency wallet, complete with cryptocurrency. The most popularly used one is currently ether (ETH), so you can start there. Also, one of the most popular NFT marketplaces is the OpenSea platform which is an Ethereum based platform.
Other than art, what else can NFTs be used for?
While NFTs are most popular for the sale of digital artwork like music, portraits, GIFs, videos and other collectables, they could also represent several other items including real world, non-digital assets such as tickets to a real-world event, deeds to a car or house, legal documents, signatures and so on.
Luxury brands in the fashion industry can use NFTs to keep a digital record of their product authenticity. People can enjoy collecting trinkets, memorabilia and other such items. NFTs allow gamers to own one-of-a-kind in-game objects. Such tokens can power in-game ecosystems, whether for enjoyment, authenticity, or competitive nature.
It is also believed that NFTs will become even more in vogue when the Facebook Metaverse is ready. The metaverse is supposed to be a sort of digital representation of the real world that will allow us to connect and interact with each other in entirely new ways. In that digital world, our avatars represent us. Our avatars would need clothes to wear, food to eat, a place to stay and so on. All those commodities will most likely be acquired through NFTs.
How can you buy an NFT?
You can use online exchanges or marketplaces to buy, sell, trade, and produce NFTs. A precise price can be set by the creator or current owner. Alternatively, there may be an auction, in which case you will have to bid on the NFT.
There are a lot of marketplaces that cater to various aspects of the collectable industry nowadays.
Nifty Gateway is an art-focused marketplace that collaborates with major companies, athletes, and artists.
CryptoPunks is the second most popular game of all time, with 10,000 distinct characters. Each can be registered as a legal entity, with proof of ownership recorded on the Ethereum blockchain.
Foundation: A community-curated marketplace in which producers must be invited by other creators who are already members.
Axie Marketplace is the official marketplace for the game Axie Infinity
Sorare, a fantasy soccer marketplace where you can manage, purchase, and sell virtual teams, is also available.
OpenSea is one of the earliest and largest marketplaces for NFTs for a variety of collectables.
Rarible provides a variety of NFTs with a focus on art. Members are rewarded with their own RARI token.
SuperRare is a digital art marketplace that curates and sells digital art.
The bottom line is…
While NFTs may have numerous practical applications in the future, they are majorly being used in the world of digital art at the moment.
NFTs provide a smooth way for creators, who may not have a large audience, to sell their digital art. There are also ways for artists to be compensated for each successive sale of their work. On the other hand, collectors have the opportunity to speculate on digital art and brag about rare items in their collections.
If you’re thinking about buying an NFT as an investment, keep in mind that there is no assurance whatsoever that the value will rise. While some NFTs sell for thousands or millions of dollars, others may be worthless or remain so.
Before you go…
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