Since 2009, cryptocurrency has come a long way. While the general public has been able to grasp its meaning and purpose quite recently, there’s another virtual kid in the block, and its name is NFT. Short for Non-fungible token, NFT shot to fame recently when Beeple – a digital artist – sold an NFT of his work, ‘Everydays: The First 5000 Days’ for over $69 million.
In this article, we will explain what NFT is & why it is the town’s talk. Let’s start with its meaning and how it works.
What’s an NFT?
Think of NFT as a unique identifier (or token) representing a particular digital work (image, video, gif, etc.) and its commercial value. One NFT is different from another NFT in terms of value. So, it’s very much unlike Bitcoin and the money in your pocket.
To break it down even further, an NFT is just a piece of code that’s recorded on the blockchain and represents a digital product. Let’s try to explain it using Bitcoins as an example since it’s a little bit more mainstream.
Bitcoin is a fungible virtual coin (remember, NFTs are non-fungible) that can be traded for another bitcoin without making a profit or loss. So, in a way, bitcoin works like money works. NFTs on the other hand work as a product or service. You assign a monetary value to it, and the same can go higher or lower in the future.
Now that you have a brief idea of NFTs, let’s figure out how they work.
How NFTs work?
Most NFTs belong to the Ethereum blockchain. Ethereum is a type of cryptocurrency that can be traded, just like Bitcoins or Ripple. The difference between Ethereum & the other types of cryptocurrencies is that Ethereum supports the creation of NFTs while other cryptocurrencies support their own version of the technology.
With this support, NFTs store more information than standard cryptocurrencies, making them work differently to other tokens & cryptocurrencies such as the Ethereum Coin.
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Where to buy NFTs?
NFTs can be purchased from NFT marketplaces, and thankfully, there are many of them out there. Below are the most popular NFT marketplaces for crypto traders:
· OpenSea
· SuperRare
· Nifty Gateway
· Rarible
· Foundation
NFTs can be attached to anything digital, ranging from art, music, gaming footage, and articles. While all these media types can be purchased via NFT, the current excitement is around the use of NFTs to purchase & sell digital artworks.
It’s believed that NFTs will revolutionize the use of technology to purchase art via a digitalized method. Another example of NFT’s success story is Grimes’ recent virtual art sale that racked up 6 million.
NFTs allow you to own authentic digital art while the artwork’s artist can retain copyright & reproduction rights. What this means in simple terms is anyone can buy an art print but the original piece will be owned by one person only.
Why purchase NFTs?
The gold rush of NFT artworks is powered by owning speculative assets that will deliver a profit in the future. As every NFT is unique on the blockchain, an artwork may indefinitely grow value as the demand for that artwork increases.
NFTs are also seen as a way to support artists and fund them to create more work. Another significant benefit of purchasing an NFT artwork is the bragging rights you reserve by owning the image or video along with a piece of blockchain.
In short, NFTs have massively penetrated the digital art market. And they are only going to get bigger with the likes of Christie’s supporting the phenomena.
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Why not purchase NFTs?
Every coin has two sides. NFTs can be stolen like anything that exists offline. Since blockchains store records of each transaction along with the item & place of the transaction, it’s harder to steal from the crypto world but not impossible.
Another NFT drawback is that digital art – like physical art – can rot. This process is called Bit Rot and is a real occurrence that deteriorates image quality and sometimes even making them inaccessible. Last but not the least, you may simply forget the password to the wallet in which you stored the NFT. It has happened to the best of us. So, we can’t simply rule this out.
Final remarks
NFTs are at a nascent stage right now. Its popular usage is in purchasing digital art but it’s obvious that the technology will be used in other industries for verification, standardization, and traceability.
With the growing popularity of NFTs, new business models are emerging across the web. As one of the USA’s leading software and app development firms, we are supporting the growth of blockchain and cryptocurrency-powered businesses.
Contact us for free virtual business and technology consultation. Drop a line to contact@bigkittylabs.com
