Blockchain 101: NFTs — What are they?
It seems like NFTs have become an overnight sensation in the blockchain universe. We went from traditional art to bored apes in a blink of an eye. With the recent OpenSea phishing attack, many people are rightfully skeptical of NFTs. But after the dust settles, what is it? This article aims to give a foundational overview of NFTs while explaining their functionality, utility, and how to purchase your own NFT.
Key Concepts
- NFT Overview
- NFT Functionality and Utility
- Purchase NFTs
NFT Overview
Non-Fungible Tokens (NFTs) are digital assets stored on blockchain networks with unique identification codes and metadata. “Non-Fungible” is a concept that represents the ability to be unique and irreplaceable. In a blockchain, tokens are a digital asset that resides on their own blockchain. Putting them together, NFTs are unique digital assets that store valuable information.
The Ethereum blockchain network hosts most NFTs. Other blockchain networks like Tron have their version of NFTs. Although you can buy, trade, and sell NFTs, they can’t be traded or exchanged equivalently. This is where cryptocurrencies and NFTs differ. All crypto coins are identical and can be used as a medium for commercial transactions, while NFTs are uniquely individual. Even though they may look similar, no two NFTs are the same.
NFT Functionality and Utility
So, why can’t you just screenshot a picture and have an NFT without purchasing it? This belief is where many people go wrong when trying to get a fundamental understanding of NFTs. Although a component of NFTs is digital art, there’s much more functionality and utility to these tokens.
NFTs can represent physical objects, digital content, and even intellectual property. Did you know that NFTs could drastically change how we deal with housing? NFTs could be used to simplify the buying process, show proof of ownership, and transfer land deeds. An NFT would be the ultimate “carfax” for homes. A homeowner’s NFT could be a digital representation of their home’s data, storing information like when the property was built, all of the property owners, property taxes, HOA fees, and much more.
Due to a blockchain’s immutable nature, NFTs could be used as digital certificates of authenticity powered by blockchain technology to ensure that your purchasing product is authentic. The co-founder of Tether, William Quigley, believes that “All consumer products, that can’t be eaten, in the next ten years will have digital twins. They will have NFTs.” NFTs can help solve the issue revolving around fake food products like supplements and medicine. With NFTs, users could scan a QR code and receive transparent data that covers nutritional information, manufacturing, and shipping information.
There are even government-related benefits to owning NFTs. NFTs can serve as a digital identity for people who lack the physical documentation that proves who they are. Voting rights is a topic that is a common occurrence in politics. Voters who want to participate in the election process must bring a photo ID and proof of residence with them when going to the polls. This marginalizes serval minority and disenfranchised communities that don’t have access to this type of documentation. Using NFTs as a digital alternative can help eliminate these issues.
Purchase NFTs
Purchasing NFTs is a relatively simple process.
Step 1: Choose an NFT marketplace — OpenSea, Axie Marketplace, and Larva Labs are some of the most popular marketplaces for NFTs.
Step 2: Create an account — once you have chosen which marketplace you want to use to buy and sell NFTs, create an account on that platform.
Step 3: Sign Up for a Blockchain Wallet — there are several wallets available to buy and sell NFTs; it all boils down to personal preference. Metamask, Math Wallet, AlphaWallet, Trust Wallet, and Coinbase Wallet are some of the more popular options.
Step 4: Buy Ether or any other supported digital currency — you can either transfer ETH or your supported currency of choice into your wallet from another wallet or buy it directly on the platform. Be careful not to share your wallet’s sensitive information. If anyone else has access to that information, they can take your digital assets.
Step 5: Choose the NFT you want to buy — browse the marketplace and choose an NFT that fits your needs.
Step 6: Participate in the auction — In an NFT auction, a seller sets the minimum price, and buyers bid on the amount of the NFT.
Step 7: Highest bidder gets the NFT — after the bidding process concludes, the NFT is sold to the highest bidder.
Conclusion
The blockchain space is filled with claims of it filled with nothing but scammers and Ponzi schemes. Although there are numerous examples of people taking advantage of blockchain technology for malicious personal gain, that isn’t an accurate reflection of the industry as a whole. Blockchain technology is simply a tool, whether that tool helps or harms is up to the person using the tool.
There are many uses for NFTs beyond owning digital art. Don’t just brush off this branch of blockchain as a scam to be ignored. Do your own research and form your own conclusions based on your findings. Remember, friends, do or do not; there is no try. Happy learning!
