- 15 Dec, 2021
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- 5 Mins Read
NFT! Everything You Need To Understand – A Beginners Guide
What is a Non-Fungible Token?
NFTs seem to have exploded as the talk of the town. From games and art to watches and tacos, these digital valuables are selling for millions of dollars. Everyone seems to be investing, buying, and creating NFTs. But are NFTs worth the money or just another Hype? Some experts even artists themselves, believe, its just the bubble to pop or a passing fad. Others say, NFTs are the future and are here to stay, which will change investing forever.
In this article, we’ll discuss NFTs, Cryptography, Blockchain and everything you need to know about it. If you are someone like me who doesn’t come from a technology background, or someone for whom technology doesn’t interest, or someone for whom NFTs seems like a foreign language to understand, you are at the right place. Here, I will be decoding NFT in a simpler language.
What is an NFT?
An NFT is a digital asset which exists completely in the digital universe – You cannot touch it, but own it. An NFT can be any type of digital file or real-world things like artwork, an article, music, a meme, in-game items and videos. They are bought and sold online. Although they have been around since 2014, NFTs are well-off the spotlight now because they are enhancing a trendy way of buying and selling digital artworks.
NFT stands for a Non Fungible Token, which means it can neither be created, forged, interchanged or manipulated because it has unique properties and authentic certificates created by Blockchain technology curbed by Cryptocurrency.
In layman’s language, if you have a beautiful painting that you wish to sell, all you have to do is paperwork and additional hassle. However if you choose to do that by using NFT, certify, digitize, and tokenize your work. NFT is nothing but a certificate of authenticity of a digital version of your masterpiece, you will be paid when you sell it for the first time, and every time it is swapped, you will get royalty profits.
Crypto-punks are a phenomenal example of NFT. It lets you buy, sell and store 10,000 collectibles with proof-of-ownership. So, NFTs are essential items with exclusive properties that can be sold in digitized form. They are mostly transferred using exchanges that allow cryptocurrencies.
Now, the question is, when one can access images or listen to music, etc online for free. So why are people willing to spend, or why would anyone spend millions of dollars to buy them? Because the NFT gives the buyer ownership of the original item. It also contains built-in authentication which serves as proof of ownership preventing duplicates. NFTs are considered an investment.
Fungible and Non-Fungible Tokens!
NFT stands for Non-Fungible Token. Physical currencies and Cryptocurrencies are “Fungible” means they can be traded or exchanged for one another. Their value remains the same. One dollar is always equal to another one dollar, and one Bitcoin is worth another Bitcoin and can usually be exchanged for one another.
Non-Fungible Tokens(NFT) represent a new kind of collectible. We will see collectibles in everything from video games with microtransactions, to every major sport from soccer, to baseball, and every big e-sport, too. NFTs are different. Each one is distinguished by a digital signature that makes it almost impossible for NFTs to be exchanged for or equal to one another(hence, non-fungible). But the price of these NFTs is determined by their uniqueness, idolization, popularity, etc. which isn’t fixed. Hence, the monetary worth of NFT doesn’t have a fixed value or regularized price structure.
How Does NFTs Work?
Now that you’ve begun understanding what NFT is. Let’s also explore and understand how NFTs work. NFT exists on Blockchain, which is a distributed public ledger which records transactions. Now let’s know, What is Blockchain Technology? A system in which a record of transactions made in Bitcoin or another cryptocurrency is maintained across several computers that are linked in a peer-to-peer network.
“Bitcoin” is a cryptocurrency or currency native to the internet or a decentralized digital currency, without a central Bank or single administrator, that can be sent user to user from peer-to-peer. NFTs are individual Tokens with valuable information stored in them.
NFTs are held on Ethereum Blockchain. Now, What is Ethereum? Ethereum is a decentralized, open-source Blockchain with smart contract functionality. Ethereum is a technology which lets you send cryptocurrency to anyone for a small fee, which is referred to as a gas fee. Ethereum has its own cryptocurrency called Ether(ETH).
An NFT is created or “minted” from digital objects that represent both tangible and intangible items including.
Art
GIFs
Collectibles
Watches
Music
Videos
Sport Highlights
Articles
Virtual Avatars and Games
Designer Sneakers
Domain Names
Even Tweets include. Twitter Co-Founder Jack Dorsey sold his first ever tweet as an NFT for more than $2.9million.
Basically, NFTs are like physical collectors items, only digital. It’s like instead of getting an actual Canvas Painting to hang on the wall, the buyer gets a digital file instead. The craze about NFTs is because of the exclusive ownership rights or the “digital bragging rights”. Yes, NFTs can have only one owner at a time. The owner or the creator of the NFT can store specific data inside them. For example, artists can sign their artwork in an NFTs metadata.
What is NFT Used For?
Content creators, artists and investors have a unique opportunity to monetize their wealth. For example, Generative Artists no longer have to depend on art galleries or auction houses or curators to sell their artworks. Instead, all the Content creators and Artists can sell their creatives on NFTs without any middleman with more profits. Being an artist, myself and exploring the world of NFTs, it’s a real recognition for us in the digital world. The struggles to sell artwork are real and NFTs have come like a blessing.
Art is not the only one which can be sold as NFTs. Designer Sneakers, memes, Gif. Real estate, virtual trading, even toilet paper, were sold as NFTs. Even celebrities like Snoop Dogg and Justin Bieber are jumping into NFTs.
In this article we understand about NFTs and its uses from an Artist’s perspective. Now, after reading this article you must be wondering should you consider investing or buying NFTs? Is it worth the risk? As NFTs are a new and upcoming advancement in the digital world of Cryptocurrency and Technology, the future is unaware of. This part, will be decoded in detail in the forthcoming blogs.
– An Artist Muse On Canvas!
