The Beginner’s Guide To NFTs: What is an NFT and How Does NFT Work?
The NFT market is at an all-time high.
And it is no surprise that the NFT art space attracts many people, including famous artists and celebrities.
Nevertheless, we have a few concerns (and we hope it’s the same for everyone):
What really is a Non Fungible Token(NFT)? How do Non Fungible Tokens(NFTs) work? Is NFT a Cryptocurrency?
The truth is, only a select few know what an NFT is.
For instance, a Money Magazine and Morning Consult survey results show that only 1 in 4 Americans know exactly what an NFT is.
Safe to say, most so-called NFT investors are clueless about what they are doing.
Worry no more!
In this article, I will explain the seemingly complex NFTs, address your deep concerns about NFTs, and provide tips on how to best invest in NFTs.
First things first,
What is an NFT Art?
To better explain the Non-Fungible Token (NFT) art, I must answer the following simple questions:
What does ‘non-fungible’ mean?
The term ‘non-fungible’ refers to something unique or standing out. This definition implies that anything “non-fungible” only exists in one version.
Consider this example: Let’s assume you own a Tesla. Although your Tesla may seem unique, it is a fungible asset. This is because there are many Teslas like yours out there. And many use your Tesla Model around the world. Safe to say, it is far from unique.
However, as for a non-fungible asset, like NFTs, we can only possess one version of it.
Consider another example: If I own one of Picasso’s legendary paintings, I genuinely own a non-fungible asset. This is because, in reality, there can only be one painting of that particular kind.
Based on my explanations so far, it’s clear that an NFT is very similar to an original painting, except that it is in a digital form. Little wonder artists majorly dominated the NFT space.
We’ve dealt with what the term “non-fungible” actually means. Now, let’s address the second question:
What does ‘Tokens’ mean?
Basically, a token serves as a means of proving ownership.
Back to our Tesla example: To prove your Tesla ownership, say to a Police Officer at a checkpoint, you must offer convincing evidence. It can either be a receipt or your car documents. In reality, those documents serve as proof that you truly own your Tesla.
In the same way, tokens validate your NFT ownership. It’s proof of ownership. You can refer to it as your NFT ID. Tokens come along with every NFT purchase. We will discuss more of that in a minute.
Now, let’s dive right into what NFT is.
What is a Non-Fungible Token(NFT)?
An NFT is simply a digital asset that can’t be owned by anyone else. It is stored on a blockchain (which can never be breached or hacked), and each NFT possesses a unique identification code. An NFT can take different forms, such as artwork, music, video, memes, pictures, etc.
How do NFTs work?
As I mentioned above, NFTs are similar to real-life’s paintings. Only the digital nature of NFTs distinguishes them from paintings.
But then, are NFTs safe?
Of course, they are.
Here is where blockchain comes in. With the invention of blockchains, you don’t have to be bothered about your NFT safety as long as your preferred blockchain certifies or validates your ownership.
Where To Buy NFTs: Top 10 best NFT Marketplaces
NFTs can be bought and sold on several marketplaces. But then, I’ve hand-selected the few best ones you can consider. A few of them are:
– OpenSea
– Rarible
– Binance
– Mintable
You can learn more about the NFT marketplaces here.
How To Buy an NFT
You can purchase an NFT in a number of ways. OpenSea is the most popular platform for purchasing NFTs. But then, there is a lot more to it:
- Set up an Ethereum-compatible Crypto Wallet like MetaMask
- Buy some Ethereum from an exchange such as Coinbase
- Transfer Ethereum into your Ethereum-compatible Crypto Wallet (MetaMask Wallet)
- Choose the NFT Marketplace that suits you best
- Connect your Crypto wallet to the NFT marketplace. A few of them are OpenSea, Raible, NBA Top Shot, Binance, etc.
- Find an NFT you love to buy
- Place a suitable bid
- Complete your purchase
Learn more about how to buy an NFT here.
How To Create An NFT
Here’s a step-by-step guide for artists or just about anyone who wants to make money from the NFT craze:
- Figure out the NFT type you wish to create (It can either be a video, an audio file, a text, a tweet, a digital painting or a photograph)
- Select your preferred NFT marketplace to sell your NFT
- Set up an NFT wallet
- Connect your Crypto Wallet to the NFT Marketplace
- Create an NFT
- List the NFT for sale on your preferred NFT Marketplace
NFTs Frequently Asked Questions(FAQs)
Which NFTs Are Currently For Sale?
There is a long list of NFTs out there. But the few best NFTs currently for sale are Lucky Block NFTs, Silks, Tamadoge, Real Estate Investment Club (REIC), Identity 20XY, etc.
You can learn more about the best and most profitable NFTs to buy here.
Are NFTs really valuable?
Of course, they are. But then, the perceived value of an NFT can vary based on several factors. Some of which are outside your circle of control. Among those factors are the NFT’s creator, how famous the owners/collectors are, and the benefits or perks it offers.
Paintings, for example, are also inherently valuable, as are NFTs.
Why are NFTs so expensive or worth so much?
The simple answer is instant gratification, which is also known as greed. The price of an NFT will likely rise as investors flock to the same potentially profitable NFT.
In short, NFTs are worth so much, mainly because they are in a bubble. Factors such as the popularity of the NFT’s creator, how famous the owners/collectors are, benefits or perks the NFT stand to offer, and so forth, also affect an NFT’s worth.
For example: Jack Dorsey, the former CEO of Twitter, sold an NFT of his first-ever tweet for a mind-blowing $2.9 million.
Are NFTs a Scam?
Not at all. Far from it. Intrinsically, NFTs are neither a scam nor a get-rich-quick scheme. NFTs are digital assets or currencies with real-world monetary value. In a nutshell, they are unique and one of a kind.
Are NFTs safe and secure?
Yeah. Your NFTs are safe on a Blockchain. They are built on a smart contract functionality, which scammers can not breach.
Final Takeaways
I’m sure you have learnt a thing or two about NFTs. But then, there is a whole lot more to NFTs and Blockchain. You can look at related articles under the NFT and Blockchain category. Also, stay in touch for more articles in the future — God’s speed.
