Right now, the world is bustling with the introduction of new & often weird-sounding concepts. People are burning a stock-pile of money on things they don’t even understand in the dream of becoming an overnight millionaire.
If you think I am talking about Cryptocurrency, you are wrong! Cryptocurrency is a piece of old news. However, there is something new in the market that’s making people go crazy. It’s NFT or Non-Fungible Token.
If you are into digital technology & stay updated with the current trends, I am sure you might have heard about it. But, if not, you are in the right place.
In this article, I am going to talk about what are NFT tokens? How does it work? Why are NFTs valuable? Is NFT going to be the future of Art? & Is NFT another bubble waiting to explode?
So let’s get started straight away.
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What are NFT tokens, really?
NFT (Non-fungible token) is a digital cryptographic asset based on the BlockChain technology. It has unique & non-interchangeable data that gives every NFT a unique identity & ownership. The core value of NFT lies in its name itself, Non-fungibility. It means, unlike any CryptoCurrency, let’s say bitcoin, it cannot be traded at equal value.
Too technical & confusing? I’ll make it simple. Let’s say you have a $2 bill. If one of your friends has another $2 bill, you both can exchange the bill as both carry equal value. This is fungibility.
The concept of NFTs is exactly the opposite of this. As I mentioned earlier, each NFT is unique & hence it is Non-fungible. In short, NFTs are blockchain-based crypto-tokens that cannot be copied or duplicated. Therefore, they are collectibles; just like a physical art or painting & they have some value to them.
Any digital file, whether audio, image, graphic, vector, GIF or video, can be stored as an NFT. This will give that original file a unique identity, so if someone copies it, the original owner will remain with the creator until & unless they sell it to someone.
So when you buy an NFT, you buy the digital version of the file, along with the proof that it’s original.
How does NFT works?
NFTs were launched first on the Ethereum blockchain. The blockchain ledger of Ethereum is used to verify the uniqueness & originality of any NFT. E.g., if you create an audio file & put it on the NFT, you can sell the ownership of the original file, just like you buy a piece of painting. And the value of this NFT is based on the buyer’s interest.
So NFTs are valued at the price the buyer is willing to pay. It can range from a few cents to millions of dollars!
Surely someone can replicate your audio file, but it won’t carry that much value as it will not have the stamp of originality. Instead, the duplicate file will be like a replica of an original painting, sold in the cheap gift shops.
But wait, there is more to it! When you buy an NFT, that doesn’t necessarily give you Copyright Ownership. This means the original creator can still create copies of that NFT & sell it without giving any royalties.
What does NFT means for the future of ART?
Artists have stayed behind the curtains for far too long. Almost every organization depends on artists of some sort, but we rarely see them in the limelight. They keep delivering results from the background without much financial remuneration. Artists keep doing it because that’s what they love.
But NFT is rapidly changing the scenario. From mere creators, it transforms artists into Sales representatives, marketers & Financers. In short, NFT is changing the way the world looks at artists.
NFT will take digital Art to a whole new level.
Who can create an NFT?
Anyone! That’s the beauty of NFT. Even if you are not an artist, you can create something, convert it into an NFT via blockchain technology & you are good to go. In addition, there are hundreds of NFT marketplaces where you can sell your NFTs.
But there is a catch. To sell an NFT on this platform, you’ll have to set up a crypto wallet. But that’s not it; you will have to add this wallet before you can sell your Art. The reason is, these websites charge you with something called “Gas Fees.”
According to the platforms, they charge you “Gas fees” for the energy their platform consumes. Above this, you will be paying commissions to sell your NFT. On top of it, you will also have to pay some conversion charges.
In short, creating Crypto is easy; selling it at a price higher than breakeven is hard!
How to invest in NFT?
Now, given the popularity of NFT, you might be prompted to buy an NFT in the hope of selling it at a higher price. But how can you buy an NFT? Can’t you download & save a digital file directly?
Sorry to disappoint you. That’s not how it works! The file you download won’t have specific information that will make it unique. So if you want an NFT, you need to buy it from the creators.
For this, you can visit any of the NFT Marketplaces like VeeFriends by Garry Vaynerchuk. You will find a lot of variety over here. There are other niche marketplaces too, where you can find specific NFTs. But for buying, you will need a marketplace-specific wallet.
Here is the list of 5 best NFT marketplace:
Is NFT another bubble waiting to explode?
With the exploding growth of every new technology, this inherent question comes attached. The same goes for NFT. In 2021, NFTs exploded as no one had ever thought; that’s why people are asking these questions.
Now NFT is a blockchain-based technology, which is a future for sure. So terming the growth of NFTs as a bubble is a bit conservative. Does the NFT market need more regulation? Yes. Does it need a proper legal structure? Yes. But is NFT a bubble? Well, I don’t think so!
We live in a rapidly changing world and are introduced to new ideas daily. NFT is one such idea. I believe NFT will reshape the Art & the way we see Digital Artists.
But before jumping in, caution is necessary. So keep learning & keep testing with one foot wet!
I hope this guide on NFT has offered you a much-needed insight.
Can I create an NFT?
Yes, anyone can. But to sell it, you might have to struggle a bit.
Is NFT similar to Cryptocurrency?
No. Although both are based on blockchain technology, they are quite different. NFTs are non-fungible, i.e., One NFT cannot be exchanged for another one as their value is different.
Should I invest in NFT?
Yes, you can, but don’t go in blind. Analyze the market in detail before you spend your money.