What Is NFT

What Is NFT and How Can It Benefit You?

The blockchain space is jam-packed with new technologies and innovative ideas that have been brewing for years. Cryptocurrency, NFTs, Metaverse, and decentralized finance have all become incredibly popular lately. 

However, with all this excitement comes lots of confusion about what these terms mean, how they work, and the benefits they offer.

In this article, We look at what is NFT, how it works, what it means for the future of commerce, and of course how you can start making money from NFTs.

What is NFT?

What is NFT?

NFT stands for Non-Fungible Tokens (NFTs) and are digital assets that are unique and cannot be replicated. This is in contrast to fungible tokens such as Bitcoin and Ethereum, which can be divided and recombined without any loss of value.

Because NFTs are unique, they can be used to represent specific items or experiences within virtual worlds and gaming environments, such as artwork, vintage cars, or even cartoon characters.

The most common examples of NFTs are Bored ape NFT Alien secret society NFT, Hasbulla NFT Noodles NFT Starcatchers NFT Hypebeast NFT, and CryptoKitties.

CryptoKitties— are digital cats that can only exist on the Ethereum blockchain because they have unique attributes (such as fur color) that make them distinguishable from others like them. Each cat has its own unique identity and cannot be copied or duplicated without permission from its owner. 

This means that you cannot create another cat-like one that already exists without permission from its owner — hence why it’s called non-fungible (not fungible).

How does an NFT work?

The easiest way to understand how NFT works is to think of it as a digital asset that you can own and transfer. It has no physical existence, but it can be transferred from one person to another via blockchain technology.

An example would be an artwork or collectible that is sold on a blockchain platform like OpenSea or Rare Bits. You can own these digital assets and transfer them from one marketplace to another by using the blockchain platform’s website or app.

In simple terms, Non-fungible tokens work by assigning each token a unique identifier known as a hash (an alphanumeric string) that’s based on its content rather than its appearance. This makes it possible for each token to be uniquely identified without relying on any external source.

How is an NFT different from a cryptocurrency?

Cryptocurrencies are “fungible”; they can be traded or exchanged for one another while NFTs are not fungible and cannot be traded against another.

In the case of a cryptocurrency, all coins have identical values, just like any other dollar bill. For example, I could trade 1 Bitcoin with you for 10 Bitcoins with someone else. That would make my 10 bitcoins equal in value to your 1 bitcoin.

In contrast, each NFT has its own unique characteristics that make it different from other NFTs in the same way that no two physical objects are exactly alike. Even if two NFTs were identical in every way except for their serial numbers, they would still be considered different due to their unique identifiers.

For instance, if you have a collectible football card from your childhood, it has its own unique history and value that cannot be replaced by any other football card in existence. The same goes for virtual objects like Cryptokitties or CryptoCelebrities where each cat or celebrity has its own unique qualities that make them more valuable than others.

How does the market for NFTs work?

How does the market for NFTs work?

NFTs can be used in a variety of ways and for many different purposes. Some NFTs are simply used as a form of currency like Bitcoin or Ether. Other NFTs may be used as a way for people to store information about themselves. 

For example, you could store your medical history on an NFT and share it with doctors whenever necessary. You could also use an NFT to store data related to your identities such as passport details or citizenship information.

Other uses include:

Artwork owned by museums or galleries could be stored on an NFT so that anyone can access it online at any time without having to physically visit the museum

Music artists could sell their music through an immutable smart contract so that they get paid automatically whenever someone buys their music

Video game companies could sell digital assets like character skins and accessories through an immutable smart contract so that they get paid automatically when someone purchases them.

How to Buy NFTs

 Most marketplaces currently use the Ethereum network, so for you to buy NFTs you will need some Ether to buy an NFT. Go ahead and open an account with an exchange like Binance and purchase Ethereum.

  • You also need to set up a crypto wallet compatible with Ethereum where you can store cryptocurrencies.
  • You can open wallets with platforms like Metamask, or Coindesk. After opening the wallet, you will need to send the ether you bought from the exchange to the wallet’s address.
  • Choose the marketplace you want to buy the NFT from. There are multiple marketplaces for NFTs. Some of the top NFT marketplaces include OpenSea, Rarible, Super Rare, and Foundation.
  • Register an account at the marketplace, you prefer.
  • Connect your wallet to the marketplace. 
  • Choose an NFT of your choice and place an order for a buy.

Popular NFT Marketplaces

NFT marketplaces are online stores where users can buy, sell, and trade NFTs. The main benefit of NFT marketplaces is that they allow you to trade your crypto assets with other users. 

Popular NFT Marketplaces

OpenSea

OpenSea

OpenSea is ancient by NFT standards, having launched in 2017, and it’s also among the largest NFT marketplaces active today. It hosts over 60,000 items and has a global audience of over 1 million people. 

The site offers a variety of features including an escrow system and an item-sharing tool called ShareDrop that lets you share items with other people through social media or email.

Rarible

Rarible

Rarible allows users to buy and sell art, collectibles, video game assets, and NFTs. It’s one of the most popular places for gamers to buy virtual goods like rare skins for their favorite games because it has built-in support for popular titles like Fortnite and League of Legends.

What’s the value in owning NFTs?

There’s a lot of debate over what gives NFTs value. For the most part, the value of NFTs is determined simply by what buyers are willing to pay for them. If you buy one as an investment, you’re essentially betting that someone will eventually be willing to buy it from you for more than what you paid.

In other words, if you buy a rare item on the marketplace for $10,000 and resell it for $4 million in a year or two, that’s great. But if you end up selling it for $1000 — or even $60 — then your investment won’t have been worth it.

That said, there are some things that can increase the likelihood of success with your NFT investments: Buy rare items with limited supply and high demand.

Also, make sure that your purchase fits into your portfolio of other assets and investments — maybe it’ll be easier to sell in five years than two months.

Who’s buying NFTs and why?

There’s a wide variety of people who buy NFTs. The majority of people who buy NFTs are better known as collectors, investors, flippers, fans, and common people all around the world. 

If you enjoy purchasing from your favorite brands and supporting different communities, then you obviously, maybe someone who would enjoy buying an NFT.

One of the most common reasons people purchase NFTs is for the collection aspect of it all. Some people just like collecting things and having them on display in their homes or offices. These types of collectors tend to focus on specific types of items like Pokemon cards or stamps or even traditional art. 

In this case, they will spend their money on whatever it is they love collecting as opposed to buying random items hoping for a profit down the line (a strategy many investors use).

Another reason that people buy NFTs is that it’s a great way to invest money into something that can grow over time if done correctly. 

There are lots of different ways that you can invest in digital assets like crypto collectibles, but there are also plenty of ways to get burned if you don’t know what you are doing.

How to make money from NFTS?

There are a few ways to make money from NFTs:

1). Sell your collection. If you have a digital artwork or collectible that you think is rare or valuable, you can sell it on an NFT marketplace. The most popular marketplace for this kind of thing is RareBits.com, though there are other options out there as well.

2). Use your collection to create a business. You can use your collection to create a business that sells unique products or services, such as customized artwork or personalized gifts for customers. For example, if you have a large collection of unique sneakers, you could sell them for a profit at events like sneaker conventions or online through an e-commerce platform like eBay.

3). Sell the rights to use your collection. If someone wants to use your collection in their own project but doesn’t want to buy it outright, they can pay you royalties instead of buying it outright. You can then use those royalties as income while still owning the rights to your collection.

The most obvious way to make money from NFTs is to buy them when they’re cheap and sell them when they’re expensive. If you buy an item for $1,000 and sell it for $5,000 a year later, that’s not a bad return on your investment.

What is the future of  NFTs?

The application of NFTs is vast, and there are already several practical examples of them in use. These include collectibles, digital artwork, and in-game items. 

In the future, it seems certain that we will see still more applications for these tokens—and with the advancement of blockchain technology and the addition of new features like ERC721x, the possibilities are incredibly exciting.

Are there any downsides to buying NFTs?

There are a few potential downsides to buying NFTs. One is that the market for them is still relatively new and unproven, so there is always the risk that the value of your tokens could drop dramatically.

Another downside is that, because they are digital assets, NFTs can be easily stolen if you don’t take proper precautions.

Finally, it’s worth noting that some people view NFTs as a speculative investment, rather than a tool for actually using or enjoying the product or service they represent.

FAQ for what is NFT

How is an NFT unique and valuable?

There are a few key features that make NFTs unique and valuable. They are:

1). Permanent and unalterable: Once an NFT is created, it cannot be changed or deleted. This ensures that the data stored in the blockchain are immutable and can never be tampered with.

2). Easily transferable: NFTs can be easily transferred from one user to another, without the need for third-party intermediaries. This makes transactions quick and simple and eliminates the risk of fraud or loss.

3). Unique and identifiable: Each NFT is assigned a unique identifier.

How is an NFT created?

How is an NFT created

NFTs are created through a process called minting, and this Minting requires three things: The owner must have some type of proof that they own the items they’re trying to turn into NFTs (i.e., ownership certificates).

The owner must have access to a smart contract program that can be used for minting purposes.

Lastly, the owner must have access to a nonfungible token registry which allows them to create new non-fungible tokens. We have covered this topic in a broader detail here.

How do NFT games work?

NFT games work by giving each player a unique set of tokens that represent their in-game assets. These tokens can be traded or sold on decentralized exchanges, allowing players to monetize their gaming achievements. 

Can NFTS be copyrighted?

The short answer is yes. If you create an NFT, you own the copyright on it, just like any other piece of art or design. You can even sell it as an individual item, either through your own website or on platforms like OpenSea or Rarebits.

What qualifies as an NFT?

Pretty much anything can be turned into an NFT

Can I make an NFT?

Certainly, you can make an NFT even without programming knowledge, and there are websites allowing you to generate NFT collections.

Bottom line

NFTs, or non-fungible tokens, are a type of blockchain product that is unique and cannot be replicated. They are often used to represent unique assets, such as collectibles or digital artwork. NFTs have the potential to revolutionize the way we think about commerce and ownership.

In this article, we answered the question ‘’what is NFT? ” And we also explore how it works. As well as the benefits it offers and some ways you can start making money from NFTs.

Ogedi

Ogedi is the Co-founder of CryptoBasics. He writes on a number of topics related to Blockchain technology but focuses mostly on Cryptocurrency, NFTs, and Decentralized Finance.

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