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What is NFT stands for? NFT is the abbreviation for Non-Fungible Tokens that has exploded in the market this year. From music to tacos, these digital assets are selling like crazy. Some people are relating it with exotic Dutch tulips that were sold at outrageous prices in the 17th century. However, one question that often revolves around the head of investors is that, are NFTs really worth their money?
Today, we will be talking about what NFT is and is it really worth the hype.
What NFTs are?
NFTs are digital assets that represent real-world objects. For example- videos, music, art, and in-game items. So, instead of getting the actual oil painting, you will be provided with a digital file of the painting as NFT. Now, you are clear what does NFT means in layman language.
They can easily be bought & sold online like Cryptocurrency. The encoding will be done using the software.
NFTs are one of a kind and possess unique identifying codes. Arry Yu from Washington Technology Industry Association Cascadia Blockchain Council says, “Essentially, NFT create digital scarcity” and this is true.
Because NFT enables buyers to buy the original item with in-built authentication and get proof of ownership.
How NFT works?
NFTs can only exist on a Blockchain and all the transactions will be recorded on the public ledger. Typically, NFTs are held on Ethereum Blockchain. It can be mined or created from digital objects that display both intangible and tangible items including,
- Videos & sports highlights
- Designer sneakers
- Video game skins and virtual avatars
You would be amazed to hear, even tweets count in this list. The best example of this is the very first tweet on Twitter by the co-founder, Jack Dorsey. The tweet is kept as an NFT for $2.9 million.
Is NFT Different From Cryptocurrency?
The interesting thing about Cryptocurrency and physical money is that they are “fungible” which means; they can be traded in exchange for another. Crypto fungibility makes it a reliable means of transaction.
On the other hand, NFT is the non-fungible token that makes use of the same programming like that of cryptocurrencies like Ethereum or Bitcoin. It is a digital signature that cannot be exchanged.
How To Buy NFTs?
Want to start your own NFT collection and acquire some digital assets? Here’s how you can do it-
First of all, you will require a digital wallet that facilitates the storage of NFTs & cryptocurrencies. Next, you need to buy Cryptocurrency, the one that is supported by NFT. This can be done using a credit card like Kraken, eToro, PayPal, Coinbase, and Robinhood. Now, you can move it from as per wallet choice. But remember, an exchange charge will be applied when you buy crypto.
Popular NFT Marketplaces
Once your wallet is set up, you are all ready to jump on NFT cryptocurrency sites for shopping. Here are some popular NFT marketplaces to buy non-fungible tokens-
It’s a famous peer-to-peer NFT platform that is specially designed for digital collectibles and items. You just need to create an account and browse NFT collections. To discover new artists, you can sort the NFT collection by piece.
It is the same as that of OpenSea however it is a democratic open marketplace that enables creators and artists to buy and sell NFTs. The token that will be issued is known as “RARI” You can make use of filters and filter well.
Foundation gives the creator the opportunity to receive “upvotes” and invite fellow creators so that they too can post their art. NFT can be mint by purchasing “gas”, this will boast higher-caliber artwork.
All the 3 platforms are host to thousands of collectors and creators. So, one thing is sure, buying and selling are secure however need extensive research.
Since NFTs are subjected to capital gain taxes and one’s willingness to pay for the digital asset, the choice of buying NFT is completely yours.
That said, NFT demands research, understanding the risk, and the decision to proceed with a skeptical dose of caution. But first check out this guide on investing in cryptocurrency.