All you Need to know about NFTs

All you Need to know about NFTs

What are NFTs?

Non-fungible tokens, or NFTs, are a type of cryptocurrency that is generated using a smart contract framework like Ethereum. They’re one-of-a-kind digital items that can be fun to have or even lucrative to trade. Consider them to be virtual collectible cards. They usually start out as a hobby for enthusiasts, but if you have a rare one, it might be worth a lot in the future. Artists can release their work digitally without worrying about counterfeits thanks to non-fungible tokens. You might copy the file from another person’s NFT, but it wouldn’t be an original.

Despite the fact that NFTs are pricey, you are getting more than just a JPEG file. You can sell your NFTs on marketplaces like Opensea and Nifty Gateway, and the token gives you ownership rights to the piece you get. To say that NFTs are nothing more than JPEG files is akin to saying that conventional art is nothing more than paint on canvas. The worth of NFTs, like traditional artwork, is determined by the artist who made it. 

gold and black round emblem

Fungible vs Non-fungible?

Cryptocurrencies may be fungible, which means that all of the currency’s units (i.e. tokens) are the same and equivalent, similar to how rice grains or dollars are.

Non-fungible tokens are the polar opposite to fungible tokens in that such cryptocurrency unit, or token, is one-of-a-kind and cannot be duplicated. This “non-fungible” property can be applied to a variety of items, including currencies. However, digital art and collectibles are behind the new NFT craze. People have realised that a one-of-a-kind digital object can be fascinating, cool, and even valuable financially. It’s why the scene has recently exploded, with tens of thousands of ventures involving art, games, and sports. 

How do NFTs work?

It is very much based on the platform. We’ll concentrate on Ethereum because it’s where the vast majority of NFTs are produced and traded.

NFTs are built on Ethereum’s permanent blockchain, which means they can’t be changed. No one may take away the possession of an NFT or make a duplicate of it. They’re also “permissionless,” which means that anyone can make, purchase, or sell an NFT without requesting permission. Finally, each NFT is one-of-a-kind and can be used by everyone. it’s like a one-of-a-kind collectible card displayed in an always-open store window that everyone can appreciate, yet only one individual (or cryptocurrency wallet, to be precise) may possess at any given time. 

A digital artwork, such as an image, is usually used to depict an NFT in practise. It’s important to note, however, that it’s not just about that picture (which can easily be replicated). The fact that it exists as a digital entity on the blockchain is what distinguishes it.

four round silver-colored and gold-colored Bitcoins

How to buy NFTs?

NFTs are purchased and exchanged in the same way as any other Ethereum-based cryptocurrency, except that instead of purchasing a group of tokens, you purchase a single token.

Step-1: Make an NFT Marketplace Account

There are numerous online marketplaces where you can buy and sell NFTs. You’ll be able to buy various types of art or collectibles depending on the marketplace you want. Many of these platforms have secondary marketplaces with a variety of NFTs, but each platform has its own set of rules.

black and silver laptop computer

The following are some of the most well-known NFT marketplaces:

SuperRare

SuperRare is an NFT social network. A piece on the platform is one-of-a-kind, and users can buy and sell these one-of-a-kind products on the platform’s website. Since the platform is built on the Ethereum network, you’ll need to finance your account with Eth tokens before you can make a purchase.

OpenSea

Opensea is an Ethereum-based marketplace for non-fungible tokens. Users can trade non-fungible tokens for cryptocurrencies by interacting with the network. It has a wide range of digital collectibles, including video game pieces and digital artwork. A web3 cryptocurrency wallet, such as Metamask, is required to use the platform. Metamask is a Chrome plugin for crypto wallets that allows you to interact with platforms like opensea. 

NBA Top Shoot

NBA Top Shot is an online shop that sells officially licenced NBA collectibles. These digital products are a modern take on basketball cards; unlike conventional playing cards, these digital cards are more interactive. The cards, for example, provide in-game clips of the featured players. A LeBron James Dunk card, which featured a clip of James dunking on the Houston Rockets and sold for over $200,000, was the most expensive card sold on NBA Top Shot. 

Nifty Gateway

The famous cryptocurrency exchange Gemini owns the Nifty Gateway NFT marketplace. Famous artists such as Steve Aoki, Grimes, 3LAU, and others partner with the site to release artwork on the primary marketplace. Collectors will also resell artwork on the company’s secondary marketplace. You can either fund your Nifty account with Ethereum or with a credit card on the website. 

Step 2: Fund Your Account

person sitting on chair holding iPad

Many marketplaces for these collectibles recognise Eth tokens as payment since most NFTs are Ethereum-based tokens. If you already have a cryptocurrency exchange account, you can use it to buy Ethereum and then send your cryptocurrency to your marketplace account.

Coinbase and eToro are decent choices for beginners if you don’t already have a crypto exchange account.

Step 3: Buy Your NFT

person holding fan of U.S. dollars banknote

After you’ve funded your account, buying an NFT is a simple operation. Since most marketplaces operate on an auction basis, you’ll need to put a bid for the NFT you want to buy. For NFTs with many prints, some marketplaces work more like an auction, using the highest bid and lowest ask. 

The future resale value of an NFT purchased from the primary marketplace is one of the advantages of doing so. Some high-demand NFTs will sell for 5 to 10 times their initial price soon after they are published. The disadvantage of purchasing NFTs on the secondary market is that it is difficult to predict demand. You can compare your purchases to previous sales on the secondary market.

How are NFTs Created?

The process of creating an NFT is surprisingly simple. Simply build an account with a marketplace like Opensea that allows users to create NFTs. You don’t need to know how to create an ERC-721 (NFT) token or even have some prior blockchain experience.

While anyone can make an NFT, that does not mean they can be sold for profit. Thousands of NFTs made by random people never sell or sell for a pittance. The media must be important in order for an NFT to be valuable. NFTs are often valued because of the artist’s prestige or the media’s historical importance. 

turned on flat screen monitor

Pros and Cons of NFTs

Artists who build new media obviously profit from NFTs. It was incredibly difficult to check the authenticity of digital media before NFTs because everyone could copy and paste the file.  However, not all NFTs are valuable, and NFTs have distinct advantages and disadvantages. 

Pros

  • Non-fungible tokens make it simple to buy and sell digital content over the internet.
  • The blockchain is used in these tokens to make authentic artwork easy to verify.
  • Collectibles such as trading cards will benefit from NFTs because they make them more social and engaging.

Cons

  • Some collectibles have become highly costly as a result of the NFT craze, and they may not retain their value in the long run.
  • If you don’t store your NFTs securely, they might be compromised in the same way as other cryptocurrencies have been.

The Future of NFTs

pen om paper

The bulk of NFTs are actually used to market digital art and collectibles. This may be a fad or a trendy way of exchanging collectible objects such as trading cards and artwork.

NFTs can be used to tokenize any real-world asset in the future, rendering asset ownership transparent and incorruptible. For real estate deeds, car names, and other non-fungible tokens, they may be highly valuable.

Since NFTs are digital, it’s difficult to equate them to coveted physical artworks like statues and paintings. On the other hand, we live in a world where one Bitcoin is worth more than $50,000, so digital items can be extremely valuable and even hold their value for long periods of time. In any case, if you want to invest in NFTs, you’ll need to learn a lot about this complicated environment because and NFT market is special. It’s also expensive — Ethereum trading can be very costly due to the network’s recent congestion, which has caused fees to increase. Finally, you’ll have to think creatively to keep up with the often shifting cryptocurrency patterns.

Reference:

Mashable Benzinga

About the author: Ayush Porwal

Digital Marketer| Blogger| Website Designer