Beginner’s Guide to Understanding NFTs| What are NFTs?
Whether you are currently transitioning into tech to offer value or to “eat tech money”, or you are just a crypto investor who just wants to build financial freedom from crypto, there is a very high chance that you have heard about NFTs.
You have also probably heard about people who bought a simple piece of art (probably ugly with no aesthetic value) for as low as $150 and are living your dream life because that piece of art flipped after a few months and sold for hundreds or millions of dollars.
“What are NFTs?” you ask. You have barely learned about crypto, and here’s everyone else talking about NFTs like you’re the odd one out. You think NFTs are the newest, fastest way to become rich overnight, especially because you have seen people do that. You want that too but don’t know what to do. I’m here to get you out of that web.
Firstly, the acronym NFTs stands for Non-Fungible Tokens. To understand this properly, you should understand what Fungible Tokens are.
Fungible simply means interchangeable. If something is fungible, it means it has equal value with other fungible items and can be exchanged for another.
Good examples of fungible items are currencies, whether fiat or digital currencies. A $10 bill can be exchanged for two $5 bills or another $10 bill. 1BTC can be exchanged for 13.96ETH.
This is because regardless of the form it takes, both share the same worth, market value, and specific value.
Non-fungible assets are items that cannot be interchanged because of their uniqueness and exclusivity. A good example is a pack of cards. A queen of spades card cannot be interchanged for a queen of hearts. Their meanings, uniqueness, and validity are and will always be different.
Other non-fungible assets include land, diamonds, etc. Human beings are also non-fungible. No other person can completely fill the gap and replace a lost loved one. There will always be a perfect combination of unique characteristics of your loved one and no one else will have the exact same combo of uniqueness.
There are also semi-fungible tokens. These are tokens that are non-fungible with other classes of similar tokens but are fungible within a class. Good examples are tickets to a show. A ticket for a music concert cannot be used for a movie show. The dates and purposes of each ticket are unique entities of each ticket class.
However, for a class of tickets to a particular movie show, you can interchange them and still retain their validity, though the seat numbers are different.
NFTs or rather, Non-Fungible Tokens are digital units of data stored and traded on a blockchain. They are pieces of art stored in digital form to represent assets, whether digital assets or physical. These unique tokens represent contracts, agreements, identities, brands, or self-worth.
NFTs are unique and distinct because they are assigned token IDs as soon as they are minted (to mint an NFT means to create an NFT and add it to the blockchain).
Without NFTs, token IDs are distinct arbitrary strings of numerical characters that have no meaning or value. When attached to NFTs, it verifies the authenticity and uniqueness of the designated NFT on the blockchain.
NFTs move from being just an ugly piece of art (or maybe not) to having so much value and deserving of being worth hundreds and millions of dollars when it is paired with metadata (metadata describes the content of the contract (NFT) contract stored on the blockchain).
Examples of metadata include images, artworks, videos, music, etc. NFTs are traded on Web3 marketplaces like OpenSea, Axie Marketplace, Rarible, Binance, etc.
The existence of NFTs provides numerous career opportunities. However, to get the most out of these opportunities, it is necessary to have a deep understanding of NFTs and everything it entails.
To explore opportunities in NFTs and how you can take advantage of them, click here.
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