What are NFTs? Non-Fungible Tokens Explained
NFTs have been one of the most discussed online trends in recent times. But unless you’ve actively spent some time researching so-called ‘Non-Fungible Tokens’, it can be a little difficult to understand why so many people have rushed to get involved.
With digital artwork sold as NFTs selling for millions at auction, the medium has unsurprisingly caught the attention of both artists and collectors in just a few short years. Meanwhile, its close relationship with cryptocurrency ensures there’s no shortage of speculation about its future.
Ready to find out more? Here, we delve into the basics of NFTs, the easiest ways to get involved, and where the future might take this budding technology.
What is an NFT?
Stored on the blockchain – an unchallengeable digital ledger – NFTs or Non-Fungible Tokens are cryptographic items with a unique identification code and one-of-a-kind metadata.
The non-fungible aspect is crucial, as it shows that an NFT cannot be exchanged or replaced, unlike dollar bills or commodities. This means NFTs have unique qualities that add or subtract value in a similar way to diamonds.
Since NFTs are stored on the blockchain, it means no third party is required to facilitate a transaction. Although fashion and real estate can and have been sold as NFTs, the medium is primarily associated with digital art.
With NFTs, the seller no longer needs an agent or gallery to streamline a sale. And because every sale is verifiable and traceable, buyers can have greater confidence in authenticity.
NFTs vs Cryptocurrency
NFTs are often discussed alongside cryptocurrency, as the latter is mostly used to purchase the former. While there is some overlap between these two digital assets, cryptocurrency is typically thought about in purely economic terms, as it’s used for purchases and investments.
However, NFTs hold economic and non-economic value. Although many online art collectors have spent massive sums on buying and trading NFTs for monetary reasons, others simply want to own one based on its hedonic value – like a rare baseball card.
Similarities between NFTs and cryptocurrency also include how both are stored in digital wallets, plus they’re created with similar programming. However, as cryptocurrency is a fungible item, it can serve as money while an NFT cannot.
What are the Best NFT Marketplaces?
As NFTs have become a hugely popular digital asset, buyers and sellers can now easily connect via a selection of convenient NFT marketplaces. With some choosing to focus on a specific niche or target audience, consider these options when you decide to purchase or sell.
OpenSea is considered by many to be the top NFT marketplace. Based on the Ethereum blockchain, customers can find everything from digital art to rare sports cards on the platform. With an easy-to-use design and exceptional security, purchasing NFTs on OpenSea is a wise decision.
Featuring frequent NFT drops from internationally renowned digital artists, OpenSea’s fees are also very reasonable compared to other marketplaces, with a flat 2.5% fee on all transactions. With hugely successful collections on the platform, find out which NFT trends are making the biggest waves with buyers.
Rarible is another leading NFT marketplace that features digital art on numerous blockchains, including Ethereum, Solana, Flow, and Polygon. Alongside some of the world’s most sought-after NFT collections, such as Bored Ape Yacht Club and Goblintown, there are always new pieces that blow up in popularity on the platform.
With Rarible offering many of the same features as OpenSea, it’s possible to upload your own NFTs for sale. Meanwhile, the platform is beloved for its community-centric vibe, as users who own the Rarible RARI token gain a vote on its future, ensuring impressive features are always on the agenda.
NFT marketplaces like OpenSea and Rarible try to make digital assets as accessible as possible. However, SuperRare has gone in a different direction, with this exclusive marketplace focusing on limited-edition collections from globally recognized brands and artists, such as Gucci, Adidas, and Snoop Dogg.
With the platform previously described as “Instagram meets Christie’s”, SuperRare has been one of the most successful marketplaces in the space. Having generated millions in sales, the platform has presented special international arts events and even opened a pop-up NFT gallery in New York City.
How to create NFTs?
The world of NFTs might seem complicated, but it’s surprisingly simple to upload your own to the blockchain using an NFT marketplace such as OpenSea or Rarible.
First, connect your cryptocurrency wallet – like Ledger, MetaMask, or Coinbase – to the marketplace of your choice. Then, you need to upload your file using a supported file type such as JPG, PNG, MP4, or WAV. As you’ll be putting your work up for sale, it’s a good idea to add an eye-catching title and description to attract buyers.
Finally, mint your NFT on the blockchain. Ethereum is the standard choice, but you might choose Polygon, Flow, or Tezos.
What are the Uses of NFTs?
NFTs have proven a great success with digital art, but they have other use cases that will continue to develop in the future. For instance, as NFTs permanently store information on the blockchain, they might revolutionize how we track and authenticate items from one owner to the next.
Many also believe NFTs could play a significant role in intellectual property and patents. As the NFT blockchain is immutable, an inventor could prove they are the genuine creator of a new product.
Although there are still many issues to overcome in the NFT space, this exciting technology has grown by leaps and bounds since it was conceived. With the idea of digital ownership and assets changing forever, now is the perfect time to get involved.
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