What Is An NFT – Everything You Need To Know About NFTs
What is an NFT
What is an NFT – Blockchain Technology and Bitcoin have changed the perception of the world in digital assets. A few years ago, when Bitcoin was struggling, nobody would have thought that cryptocurrencies and other things related to blockchain would become a huge success.
In the last 3-4 years, only securities based on blockchain have seen tremendous growth. Fixed deposits or investment in the stock market is not 1% of what the blockchain did for the fans.
Now the fever of cryptocurrency is going down, and a new NFT, also known as a non-fungible token, is taking over, and it has become the most popular thing of the year 2021. That is why we have come up with all about NFT. Let’s take a look.
What Is An NFT?
What is an NFT – NFT, also known as a Non-Fungible Token, is an entry on the blockchain, which is the same decentralized digital Ledger technology that underlies Bitcoin and other cryptocurrencies.
Every piece of NFT is unique and of kind things. One of the biggest problems was marking the original copy of any digital file. For example, if you took a photo of something and put it on the Internet, now everyone is claiming it’s theirs.
On the other hand, if you put that same photo on the blockchain, then your picture will be marked as the original. Apart from that, you can easily sell these digital assets.
The early examples of the two most popular NFTs were crypto punks and crypto kitties. Nowadays, cryptocurrency sells for around 100,000 U.S. dollars, and cyberpunks for over $1,000,000.
What is the difference between NFT and Cryptocurrency?
Even though NFT and cryptocurrencies are based on the same technology and use the same principle. But, there is a huge difference between both the technologies and items.
Cryptocurrency is like any other currency in the world. It has value, and it is fungible. This means within the particular cryptocurrency, and it doesn’t matter which crypto token you have, it has the same value as the next one. For example, your $1 bill is equal in value to anyone else’s $1 bill.
On the other hand, each NFT is unique. Each NFT has its own value, and if another NFT is doing very well, then no one can share your NFT will increase in its value. For example, you invested $100 in one NFT. And now, no one else is looking to buy that NFT. You are stuck in that investment till another one buys it from you.
What is the use of NFT?
Let’s take a look at the top users of NFT. These are not just a collection of tickets or images. NFT has a great future. That is why people are paying millions of dollars to acquire small NFTs.
We can use NFT for identification, certification, and documentation also degrees, academic certificates, licenses, and other qualifications. Every NFT is unique, and it contains a certain code that can trace back to the original owner. Experts believe it can eliminate any document fraud in the future.
Experts believe it is going to revolutionize the ongoing domain industry. Currently, the Internet Corporation for assigned names and numbers controls the standard domain name service. But in the future, Ethereum name service and unstoppable domains with decentralized alternatives can change the whole industry.
How to Buy NFT?
There are three major ways you can use to buy NFT. The first one is private sales, the second is traditional auction houses, and 3rd is online marketplaces such as OpenSea. For starting, I will suggest you go to OpenSea or a similar online marketplace and create your account.
Once you have created your account now, it will be time for you to select which NFT you want to buy. You can search for your favorite creator And only from generally verified content creators.
Every marketplace has a different payment system. Few marketplaces accept U.S. dollars and others accept U.S. dollars along with cryptocurrencies such as Bitcoin and Ethereum. Kindly remember you cannot pay using cash or credit cards.
Popular Marketplaces of NFT
Just like anything in the world, you need a marketplace to buy NFT. Without a marketplace, you will not be able to find new customers or buy new NFT. Let’s take a look at a few popular marketplaces.
OpenSea Is one of the most popular marketplaces in the world to buy or sell NFT. You can find any kind of NFT, including games, music, and other artwork. You can also use the mining tool offered by the platform to create your own NFT.
Rarible Is one of the leading NFT markets based on Ethereum. Just like any other marketplace, you can buy and sell any kind of digital artwork, including music and games. It’s charged around 2.5% Commission on every transaction, and the creator gets a royalty of 5 to 10%.
NBA Top Shot
NBA top shot is one of the most popular marketplaces among sports enthusiasts. The platform allows fans to trade digital moments from the NBA. For example, you are watching a live NBA match and capture some player making a horrible shot or one of the classical shorts, which you can mint it on and we’re top shot and sell it.
Should You Buy NFT?
You have learned nearly everything about NFT. Now it is time to learn about whether you should buy it or not. Is it going to be a profitable investment like cryptocurrencies or stocks or not? These are the few questions that everyone is asking these days.
Kindly remember even if you buy NFT, you will not possess anything physically. Every artwork is going to be in digital format. If you are a person who likes to possess things in the real world, then I will advise you to stay away from NFT.
In general, every financial expert will tell you to stay very cautious while investing in any digital assets such as NFT or cryptocurrencies. As a thumb rule, you should never invest more than 10% of your capital in digital assets.
You can only make money if someone else thinks your art is better and willing to pay more than you did last time.
For example, if you buy one share of apples and the price rises, you can sell it without any worries. But in NFT, you can sell your digital assets only when other people think your asset is better than anyone else.
If you are good at making judgments or you have experience, then NFT is a good option for you.
Major Pros and Cons of NFT
Just like everything in the world, NFT also has a huge list of pros and cons. Let’s take a look at a few of the important ones.
- NFT gave ownership to its original artists. You can easily check who is the original artist of that digital asset as it is available on open-source blockchain technology.
- Every NFT is unique, and it is very hard to make any counterfeit or original art.
- NFT Are immutable, which means no one can alter, erase or replace them.
NFT also has a few cons associated with it. Let’s take a look at a few of the majors at once.
- NFT runs on emotions, and they are not one of the safest investment options.
- Even though the technology claims that no one can counterfeit digital assets, we all know it is very easy to create a copy of original content.
If years ago, if anyone had told you there is going to be something called NFT and it is going to be a huge success, you might think that person is crazy.
But, blockchain technology has made everything like that possible. Nowadays, people are earning crazy by trading NFT on NFT marketplaces. These digital non-fungible tokens are making people millions of dollars every day.
Don’t get confused with cryptocurrencies as NFT or NFT as cryptocurrency. They both are completely different, even though they are based on the same technology. Every NFT is unique with a different value. On the other hand, all the bitcoins are the same and have the same value.
There are many marketplaces that you can use to buy these NFTs. You can easily create an account on one of these marketplaces and start buying your favorite digital arts.
Kindly read all the pros and cons of investment in NFT. Investing more than 10% of your overall portfolio in digital assets can be very dangerous as all NFTs are unique and have a different values. So even though the NFT market is roaring, this doesn’t mean you can also make a profit as you did in cryptocurrencies.
I am an artist, but I don’t know what NFT is. What should I do?
The NFT marketplace is one of the best things to happen to any artist. If you are able to create something creative, then you can hire an NFT maker company, and they will create NFT for you based on your art. If you don’t know what NFT is, then do not worry about it. That company will take care of everything for you.