Most of the time, when we hear something new about blockchain technology, we have no clue about what’s happening until we do some research on it, right? These new rising technologies evolving around blockchain have been blowing our minds for more than ten years now, and they are not going anywhere.
One such example is an NFT or non-fungible token. You’ve maybe heard of it when the co-founder of Twitter sold his first tweet as an NFT for almost $3 million. Or, when Grimes got millions of dollars for her non-fungible tokens. There are many examples, however, it doesn’t explain to the wider audience what exactly are these NFTs and what you can do with them.
So, let’s start with the NFT explanation and see what key information you need to know about non-fungible tokens.
What is NFT?
NFT stands for a non-fungible token, where the ‘non-fungible’ means that these tokens are unique and can not be replaced with anything else. When compared to cryptocurrencies, one Bitcoin is fungible, so it can be traded for another Bitcoin. Following the same logic, physical money and any other cryptocurrency can easily be traded or exchanged for the same value, whereas a non-fungible token cannot. So, if you have an NFT that is a unique trading card, you can not change it for the same value. You can change it for a different card, but you will not have the exact item worth the exact value then.
How NFT Works?
The majority of non-fungible tokens are part of the Ethereum blockchain. Just like mentioned Bitcoin or Dogecoin, Ethereum is a cryptocurrency that supports these non-fungible tokens, which are storing additional information that differentiate them from, for example, an ETH coin. An important thing to keep in mind is also that other blockchains can easily implement their own versions of non-fungible tokens.
To understand which would be the best NFT for you to buy, you will first need to know which NFTs already exist and something becomes an NFT.
What Can be an NFT?
As the term is a bit confusing and it’s not clear to those hearing about NFTs for the first time, it’s vital to clarify what can be an NFT and what can not. Anything digital can actually be an NFT. For instance, music, art, drawings, videos, GIFs, etc. There’s plenty of possibilities, but the current fuss around NFTs is focused on using the tech to sell digital art. We mentioned already the cryptocurrency Dogecoin. So, Degocin is not an NFT, but a GIF of it is.
When talking about NFTs, the majority of conversations are around the evolution of fine art collection, yet in a digital form. Think of it as a digital way of collecting art, just now people are not having that art exposed in their homes, but they own it in a digital format. And, there is already a lot of demand. If you’re uncertain about it, remind yourself of Grimes who was paid $390,000 for 50 seconds of her video. What’s interesting is that you can copy a digital file numerous times, even the art that is included with an NFT. Yet, they are designed to give you something that can not be copied, and that’s ownership. So, if we’d use terms from the art collection, it means that anyone would be able to buy a Picasso print, but only one person, the owner of the NFT, would own the original version.
The Objective of NFTs
So, after reading all of this, you might wonder what is the actual point of non-fungible tokens? The answer will depend on whether you are a buyer or an artist. For artists, an NFT gives you the opportunity to sell your work and avoid the struggle of finding the right market to sell it. Maybe you have thought of a really cool digital sticker idea and selling it as NFT can provide you with the success you’re seeking and also the financial compensation.
Another great thing about non-fungible tokens is you can enable a feature that will pay you a percentage each time the NFT is sold or changes the owner, ensuring your work is getting the reputation it deserves.
If you’re a buyer, you will be able to financially support artists you prefer. If you decide to buy a non-fungible token, you will have some basic usage rights, but also be able to post that piece you bought online or even set it as your profile picture. For those who enjoy collecting art, the value of NFTs is incredible if the person doesn’t mind owning the art in a digital version.
Those who wish to make money from NFTs, will buy them and wait for the moment when the value of their purchased NFT goes up and sell it for the higher price. So, an NFT company is any business or individual that decided to put their work as NFT and sell it on the NFT marketplace to a buyer who is interested in it.
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