In recent years, digital currencies have taken the investment market by storm, but there’s a recent upbringing to a new digital asset that has filled your newsfeed with podcasts, news, and articles about, and it’s called NFTs or Non-Fungible Tokens. There are already NFTs by various artists that were sold for millions of dollars, and yet there’s a chance that you’re still in the dark as to what NFTs are and why everyone is obsessed with it. In this article, we’ll take on what NFTs are to gain a better understanding of the asset and why we should pay attention to them as they are here to stay and can definitely change the ownership of media, music, and intellectual property are managed.
The Essence of Non-Fungible Tokens
Non-fungible tokens, or commonly known as NFTs, are completely unique and non-interchangeable units of data that are stored in the blockchain to establish an individual’s ownership of an asset, and it’s commonly found hidden in quirky artworks in the digital space. In general, NFTs are digital assets that are quite collectable while holding their own value, similar to how real pieces of art hold value.
Although NFTs were founded back in 2014, the technology has recently gained the attention of many investors due to its increasing popularity as a means of buying, selling, and digital trading pieces of art. Generally, NFTs are one of a kind and have their own unique codes, or at least there’s one unique identifying code of every limited run. In fact, there’s been a record of around 174 million dollars that was spent on NFTs since November 2017.
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NFTs Vs Cryptocurrencies
As mentioned above, NFTs stand for non-fungible tokens, and it’s typically built similarly to digital currencies, such as Ethereum or Bitcoin, as it uses the same programming to do so. At length, cryptocurrencies and real money are considered “fungible,” which means that it’s an asset that can be exchanged or traded interchangeably. Moreover, their value is always equal to each other as one dollar would always be worth another dollar, and one Bitcoin would always be equal in value to another Bitcoin.
Because of how cryptocurrencies are considered fungible, it makes the asset a trustworthy means to conduct transactions on the blockchain. But NFTs, on the other hand, it’s relatively impossible for the asset to be equal or exchanged to one another as each has its own unique digital signature to consider, thus the name non-fungible tokens.
How NFTs Work?
NFTs generally exist on a particular blockchain, which also has a public distributed ledger that records all of the transactions in a block that can’t be manipulated or tampered with. If you’ve already done your research about digital currencies, then you’re probably already familiar with blockchain technology as the underlying process that makes crypto-related transactions possible.
To be more precise, NFTs are typically held on to the blockchain of Ethereum; however, there are also other blockchains that also support them. When an NFT is created, or in more specific terms “minted,” it’s typically from digital objects representing intangible and tangible items, and those items include art, GIFs, collectables, designer sneakers, music, sports and video highlights, virtual avatars, and so much more. There are also times that tweets would count as the co-founder of Twitter, Jack Dorsey, sold his first-ever tweet as an NFT, and he sold for more than 2.9 million dollars.
Who Utilizes NFTs?
NFTs had just started to have a moment in the market, and the people who benefit from it are gamers, artists, and various brands across a vast culture. For artists, getting involved in the NFT industry adds more possibilities for them to sell art, as well as provides fans with a way to support the artist. Also, NFT artworks range from small, enjoyable, and easy to create GIFs to more ambitious works; in fact, a Rainbow Cat GIF that was previously considered as a meme became an NFT which was sold by NyanCat for around 690,000 dollars.
These days, NFTs are giving the concept of in-game purchases quite a stir, especially in popular games. Up to this day, any type of digital asset that was bought within a video game would still belong to the company that made the game; gamers only buy them to use it temporarily while playing the game. But with NFTs, it would mean that the ownership of a particular digital asset within the game would shift towards the player who bought it. With that in mind, in-game items and other assets can be bought and sold across various gaming platforms.
How Would You Buy NFTs?
If you’re intrigued by NFTs and want to start your own collection or looking to earn from it, there are some things that you need to initially acquire. Firstly, you would need to have a digital wallet that would allow you to store digital currencies and also NFTs as you’re likely to buy crypto first as it will depend on what type of currencies your NFT provider accepts. Regardless, you would want to consider the fees involved, as most exchange platforms charge a percentage of the total transaction.
Once you’ve chosen the digital wallet and it’s already funded, you’re now ready to shop NFTs as there’s no shortage as to where you can buy them from. In 2021, there are numerous NFT marketplaces that are considered the largest among the rest, and those are OpenSea.io, Rarible, and Foundation. The platforms mentioned hosts thousands of NFT collectors and creators, so before buying one, you have to ensure that you’ve done your research on that particular digital asset. There are already some artists that fell victim to numerous impersonators that listed an artwork without the permission of the original owner or creator.
Just because you have the capability to buy NFTs, it doesn’t completely mean that you should. Similar to digital currencies, NFTs are risky because of how uncertain the asset’s future is; also, we don’t have enough history with NFTs to judge the performance of the asset. Ultimately, investing in NFTs largely depends on a personal decision, so if you have some spare money, it can be worth considering investing in them, especially if the NFT asset holds meaning for you.