The World behind NFTs
What is NFT, and How Do NFTs Work?
Blockchain news always makes you wonder, “What’s going on here?” This is what I felt when I read about the $ 69.3 million sale of Everydays by Beeple and saw CryptoPunks images selling for millions of dollars.
I wondered how in the world did this NFTs value get this high. I bet at this stage; you might just be wondering the same. Like, “What exactly is an NFT, and how exactly does it work?”
What is an NFT?
NFTs are non-fungible tokens representing real-world objects like art, music, in-game items, and films. They’re bought and traded online, often using cryptocurrency, and usually encoded with the same software as many other cryptos. It’s generally built using the same programming as cryptocurrency and held using blockchain technology.
Even though they’ve been there since 2014, NFTs are gaining popularity as a popular means to buy and sell digital artwork. A whopping sum of $174 million has been spent on NFTs since 2017.
History of NFTs
The narrative of NFTs and the man who invented them, Kevin McCoy, began on May 3rd, 2014. He designed “Quantum,” a non-fungible cryptocurrency that is a pixelated image of an octagon packed with shapes that share a central point.
CryptoPunks, a set of collectible digital characters traded over NFTs, was first released in 2017 by American studio Larva Labs. With about 10,000 CryptoPunks to gather, it is an excellent place to start if you’re trying to wrap your brain around the technology. However, because they are digital commodities, the ability to generate copies, which could be helpful, is limited.
How are they Used?
When an artist completes an artwork physically, it is the only copy of it. Using the combined expertise of art historians and experts worldwide, technology, fakes can be detected, and forgeries are difficult. However, digital art may be replicated more quickly, simply duplicating a file.
NFTs are used by encrypting the digital artwork source using blockchain, ensuring that it remains the definitive version of that piece.
Examples of NFTs
NFTs are created from digital objects that represent both tangible and intangible objects, such as:
- Art
- Collectibles
- Virtual avatars and video game skins
- Designer sneakers
- Music
- GIFs
- Videos and sports highlights
What are the items that are worth picking?
NFTs can be anything digital. Still, the current buzz is focused on exploiting the technology to sell digital art.
Potential dangers or risks
- Trading NFTs involves technical processes that are frequently misunderstood, putting investors in the dark about what they’re getting themselves into.
- You’ll have to pay a charge every time you connect to the blockchain to cover the price of “mining” — the extremely energy-intensive computer operations required to verify each transaction.
- Thousands of people may race to get their hands on a hotly coveted NFT as soon as it is available, and they will be accountable for the fees even if they leave empty-handed.
- Some buyers employ bots to ensure that they obtain a token, making the market even more inaccessible to newcomers.
How to Create NFTs
The potential for big bucks is leading more people to create NFTs, hoping to take advantage of the current epidemic. This is a step-by-step guide on how to create NFTs and sell NFTs.
How to Buy NFTs?
After understanding what NFTs are used for and what specific advantages they have over other cryptocurrencies, it is advisable to try buying NFTs. In that case, you need to get some important items before you can do this;
- First, you’ll need to get a digital wallet that can store NFTs and cryptocurrencies
- Depending on the currency your NFT provider accepts, you may need to buy the cryptocurrency.
- You can buy cryptocurrencies from trusted marketplaces or platforms such as Coinbase, Kraken and PayPal.
- You can then move the cryptocurrency from the exchange to the wallet of your choice.
Kindly note that there is a fee for investigating options as most exchanges charge at least part of the transaction when purchasing crypto.
Common Marketplaces
NFT marketplaces are coming up at an alarming rate due to NFTs newfound popularity. Although there are many to choose from, here are some of the most popular and trustworthy NFT marketplaces to get started.
- OpenSea.io: This is a peer-to-peer marketplace that claims to sell “rare digital products and memorabilia.” To get started, all you need to do is establish an account and browse the NFT collections.
- Foundation: Creators need to receive invitations from other creators to publish their art. Community exclusivity and entry prices (artists also need to buy “gas” to create NFTs) mean they may have higher caliber artwork.
- Nifty Gateway: It is an all-in-one platform to buy, sell and store digital art and collectibles.
- Rarible: Artists and creators can issue and sell NFTs through Rarible, a democratic, open marketplace. The platform’s RARI tokens give users the ability to vote on things like fees and community regulations.
Future of NFTs?
Due to their growing popularity, NFTs may occupy a more important part of the digital economy in the future. Experts predict that within five years digital art will overtake the traditional art market.
How is an NFT different from Cryptocurrency?
NFTs are typically programmed in the same way as cryptocurrency, such as Bitcoin or Ethereum, is programmed, but that’s where the similarity ends. NFTs have a digital signature that prevents them from being swapped for or compared to one another (hence, the name is non-fungible).
Cryptocurrencies and physical money can be traded or exchanged for one another. They’re also worth the same amount — one dollar is always worth another and one Bitcoin is always comparable to another. Its fungibility makes it a secure way to execute blockchain transactions.
Why Should You Get Either NFT or Cryptocurrency?
Cryptocurrencies are fungible, meaning that they may be traded or exchanged for other cryptocurrencies. For example, one Ethereum is always similar to another Ethereum, or one Pound equals one Pound. Each NFT acts as a digital signature, making it impossible to exchange them.
Take the Nigerian Man who took a photo and sold it for NGN 1.2million or the 12-year-old artist who has also earned a lot doing the same. These success stories can be taken from any other investment/business that can be ventured into hence a lot still need to be done. Make more research, and understand all possible risks just before getting that dough.
Thank you for reading. Feedback is always welcome.
