You would be surprised to know the amount of coverage Blockchain has gotten over the last few years. But, there is nothing to feel disheartened, if you have missed out on keeping up with the technology. If you are wondering why people are paying millions of dollars just to own a GIF, this article is just for you.
Trying to figure out the underlying NFT meaning and what’s all the hype is all about? Here we will be explaining from the bare basics, and how does the technology work altogether? Who knows the next time around, even you can become the owner of a digital asset?
What is NFT?
In short, NFT stands for Non-Fungible Tokens. If that isn’t clear, Non-Fungible can be best described as something that is unique and can’t be replaced whatsoever. For easier understanding, any cryptocurrency like Ethereum can easily be replaced by another Ethereum.
On the contrary, NFT is more like that one-of-a-kind trading card, which is non-fungible. It is imperative to understand that NFTs are a part of the Ethereum Blockchain. By storing additional information, Blockchain can make each NFT look unique. Other Blockchain networks can also implement their versions of NFTs as well.
How Do NFTs Work?
Just like Cryptocurrencies, NFTs also use specialized platforms for buying and selling. For instance, OpenSea is the most popular NFT marketplace. That being said, buying an NFT simply involves the transfer of the object via a token.
So, even if a famous painting in the form of NFT is sold, the buyer won’t receive the actual painting. What actually changes hand is the certificate of ownership. This certificate is registered within the Blockchain network.
This certificate, in turn, is kept safely in a digital wallet. Even in order to buy an NFT, one needs to have sufficient said cryptocurrency. With a little more knowledge of the technology, one can even ‘mint’ or make their own NFT. (something we are going to cover soon.)
Are NFT’s Turning into Art Collections?
This is quite the discussion, whether the future of NFT is turning into an art collection? While there are several scopes of the technology, this is where the market seems to be invested currently at the moment.
After all, why would someone pay $390,000 for a simple 50-second video by Grimes? Then there’s the video by Beeple which was auctioned for $6.6 million. And the fun part is, anyone can head over to the website and download the video for themselves.
What makes this so unique is that, after buying an NFT, one can retain ownership of the work. Bear in mind, the artist still keeps the copyright as well as reproduction right. Something similar to what you can find in physical artworks.
What You Should Know About Penguin Communities?
There are several instances where you might have come across communities built around collectors and hobbyists. Just like the craze of collecting Pokemon or Baseball cards. Something similar is happening with NFTs as well.
One such community that has gained huge popularity for collecting NFTs is called Pudgy Penguins. While they were the early adopters of NFT, another such project includes CyberPunks and the Bored Ape Yacht Club built around mutated apes.
This goes without saying, the NFT community just like any other heavily depends on vibing their collections over Discord and other social media platforms. Keeping track of them can give you a clear idea of the overall market sentiment.
Should You Consider NFTs as Investment?
If anyone asks around the question, what is an NFT? The answer can be subjective. While some consider NFT as a cool technology with a promising future, others are heavily invested for monetary gains.
One aspect we all can agree upon is that NFTs are gradually becoming the future of artwork and are expected to grow exponentially over time. But, it is imperative to understand that the NFT marketplace, just like cryptocurrency is subjected to volatility.
That means a guaranteed profit is something you can’t always expect. The legal understanding of everything related to NFT is also hard to comprehend as well. The underlying asset is given to the owner while the copyright is still retained by the creator.
For other use cases, NFTs are structured in such a way that it allows additional purchases to the intellectual property rights. This includes the right to exclusive use be it for commercial or non-commercial within the scope of fair usage.
The right is retailed until it is transferred to a third party. In other words, until it is sold to another party. Now, these are some of the aspects that one needs to keep in mind while considering NFT as an investment.
How to Buy NFTs
While we were saving this part for another article, it is worth giving you a brief introduction. Basically, Non-Fungible Tokens can be bought and sold in various NFT marketplaces including OpenSea, Rarible, and Enjin Marketplace.
If you want to Mint NFT, you need to use other websites as well. But the very first step is to get yourself an Etherium wallet. Some of the most commonly used wallets include Metamask, Math Wallet, and Enjin.
Are There Any Risks Involved?
Like every other investment, NFTs also bear risks that come from the technicality involved which are often misunderstood. For every transaction within the Blockchain, one needs to pay for mining which is a great energy-intensive task.
Once an NFT is minted, collectors might rush to get their hands on the NFT while paying, even if they don’t get anything in return. So, it is very important to have a clear understanding of the technology involved and then make your move likewise.
What Exactly is NFT Gamification?
NFT Gamification is yet another term you might come across with the advent of technology. This is where all the typical game dynamics such as scoring points, game rules, and even competition are directly applied to Blockchain technology.
In other words, through NFT gaming, players can trade and swap various game assets for financial rewards. One fine example of such a game is My Neighbor Alice, where players can build and create their very own virtual world using NFT.
The Bottom Line
So that was our curated guide on everything you need to know about NFT and how does it work? This goes without saying that NFTs have indeed become an innovative application of Blockchain technology.
Backed by its fast adaptation and business usage, NFTs offer some promising growth in the near future. So, if you are someone who likes keeping up with the technology, our recommendation would be to keep a close eye on NFTs.