NFTs or Non-fungible tokens have today become one of the most revolutionary evolutions in the world of Blockchain technology. Having taken the entire world by storm, NFTs can create a quantifiable value for anything from art pieces or music, to a simple tweet or a selfie, and are being sold for millions of dollars! According to DappRadar data analytics, NFT sales increased by $25 billion in 2021 as a result of the booming popularity of crypto assets, driven by increased attention from global celebrities and tech enthusiasts. So, this article is designed to help you grasp the basics of NFTs and uncover their incredible potential.
What are NFTs
An NFT can be literally anything that can be digitized; that is, converted into a digital format. Drawings, photographs, movies, GIFs, music, in-game objects, selfies, and even a tweet may all be converted into NFTs, which can then be traded online using many popular cryptocurrencies. NFTs are gaining a lot of traction these days since they’re a great way of displaying, promoting, and marketing digital artwork, with massive potential for creators. Hundreds of millions of dollars have been spent on NFTs since its introduction in 2015, and so far, a whole host of celebrities including the likes of Eminem, Snoop Dogg, Jimmy Fallon, Stephen Curry, and more, have become owners and creators of NFTs.
How do they work?
NFTs are fundamentally based on Blockchain technology, granting holders absolute ownership of the digital asset. In order to lists your NFT on a marketplace, you are required to pay a gas fee (transaction fee) for the use of the Blockchain, after which, your digital art is registered on the Blockchain. This permanently records your ownership of the specific NFT using your specific address, and gives you complete control over the content. Once registered, the NFT cannot be edited or modified by anyone else, even including the marketplace owner. This is how NFTs are created, or ‘minted’, in order to obtain exclusive ownership rights. At any given time, NFTs can only have one owner, who can even digitally sign their artwork and record specific information in the metadata of their NFTs. This information is only visible to the person who purchased the NFT.
NFTs and Cryptocurrency?
While NFTs and Cryptocurrency are both built on blockchain technology, they are very different from one another. NFTs are bought and sold using cryptocurrencies like Ethereum and Bitcoin, which are fungible in nature — that is, they are interchangeable and can be exchanged for another unit of themselves. For example, one crypto token of Ethereum is always going to be equal in value to another. But NFTs are non-fungible as the value of any one of them is always different from another, making them completely unique.
How to Buy NFTs?
And lastly, to wrap up the basics, the only thing you need to buy NFTs is a cryptocurrency wallet. Owing to the lack of consolidated legal guidelines, you do not even need any kind of KYC documents. As long as you have a cryptocurrency wallet powered by Metamask, you can visit a range of NFT marketplaces where you can buy or sell NFTs. Some of the most popular NFT marketplaces include OpenSea.io, Rarible, and Foundation.
