NFTs, or non-fungible tokens, are a type of cryptocurrency created on a smart bargain platform like Ethereum. They are unique digital objects that can be interesting to own or even profitable to trade. Think of them as digital trading cards. Generically, they start small that only enthusiasts care about, but if you get a rare one, it could rule a lot one day.
What are fungible and non-fungible?
Cryptocurrencies can be fungible, which means that all units of the currency (that is, tokens) are the same and the same, such as grains of rice or dollars.
Non-fungible tokens are the complete opposite: Each cryptocurrency platoon, or token, is unique and cannot be replicated.
This “non-fungible” property can be used for many things, including certain types of coins. But NFT’s blatant mania is primarily driven by digital art and collectibles. Kin has discovered that a unique digital object can be interesting, formidable, and even have a significant monetary value. That’s why space has recently flourished, encompassing thousands of projects involving artwork, games, and sports.
How do NFTs work?
It depends on the platform. But given that the vast majority of NFTs are created and traded on Ethereum, we will focus on that.
NFTs are created in Ethereum’s block captivity, which is immutable, meaning it cannot be modified. No one can undo their ownership of an NFT or re-create the same one. They are also “without permission”, so anyone can create, buy or betray an NFT without asking for permission. Ultimately, each NFT is unique and can be viewed by anyone.
So yeah, it’s like a one-of-a-kind collectible malleable in an ever-folksy wardrobe that anyone can honor, but only one person (or cryptocurrency wallet, to be exact) can own at any one time.
In a practical sense, an NFT is usually represented by a digital artwork, such as an image. But it’s important to understand that you are not pandering to just that image (which can be easily replicated). Its existence as a digital object in block captivity is what makes it unique.
How do I buy or change NFT?
NFTs are bought and traded like any other Ethereum-based cryptocurrency, only that to buy a certain number of tokens, you buy a single token.
To do that, you need to start by installing Metamask, a browser extension that allows you to interact with various facets of Ethereum, such as exchanges and dApps (decentralized applications). MetaMask is even a digital wallet for Ethereum and all tokens created on Ethereum (both fungible and non-fungible).
After installing the extension, you need to buy a little Ethereum (you can do it directly in MetaMask with a debit mailer or Apple Pay by clicking “Associate funds”). But be very careful with your funds: store your MetaMask password and private wallet essence for a safety reason. Then when you visit a website that sells NFTs (like NBA Top Shot) or an exchange where you can trade them (like Uniswap), connect your MetaMask wallet to the site (only do it on sites that you know are safe) and buy your first NFT.
Why are NFTs valuable?
Of course, before you buy a little, you will probably want to understand why it is a good purchase. In fact, why would anyone buy an NFT, and why should a buyer own a willing to buy even more tickets in the future?
Ideally, the worth of NFTs doesn’t just come from a digital hot potato hinge, where you buy little in hopes of selling for more down the road. And so on, until everything breaks. Ideally, the NFT should be of value to you because… you like it. If you are an NBA fan, you may wish to have an official NFT representing your protected gambler. Or maybe there is a digital merciful that you like.
Sure, in a way, many NFTs are just digital images that you can right-click and unlearn on your computer. But NFTs even reside in block captivity, which makes it extremely difficult to copy them in their entirety. The blockchain entry even transparently tells you who created the NFT. If a famous musician says, “Yes, that’s my Ethereum address that created this digital image of a possum.” So that can be corroborated in the block captivity.
- Larva Labs CryptoPunks are among the most coveted (and expensive) NFTs out there.
- Caterpillar Labs CryptoPunks are among the most coveted (and expensive) NFTs out there.
Some NFTs can be valuable in other ways. Say, for example, you buy an NFT related to a swath hinge. Perhaps that NFT will one day grant you a singular prestige in the hinge, or it could even be the mat for you to obtain some other difficult-to-get object; little that only you can have because each NFT is unique. If you’ve ever played World of Warcraft or a similar hinge, you know how valuable an alcove of armor or weaponry can be. Now with NFTs, no one can take it off, not even hinge owners.
Let’s go back for a second to the digital hot potato hinge. NFTs are a fledgling space, and there is a lot of hysteria and scams. You may see a certain NFT sold for millions and think that you can even buy a little for a few dollars and get rich selling it to someone else upfront. It can happen, but it is rare. And these things can be manipulated. For example, a crypto whale (someone who owns large amounts of the crypto ticket) can buy many NFTs and then “sell” them to himself (his other crypto address) for millions, artificially inflating the price. So be careful: just because some NFTs were traded for a lot of tickets, don’t think this automatically means that all other similar NFTs are even valuable.
What are the most expensive NFTs?
In the early days of space, we saw a blockchain hinge-like CryptoKitties selling virtual cats for tens or even hundreds of thousands of dollars. Music producer 3LAU recently sold a limited-run collection of 33 NFTs for more than $ 11 million. Musician Grimes (even known as little X Æ A-Xii’s mom) even sold his digital art collection for $ 7,500 each, for a total of $ 6 million in sales. Yes, these things can be very expensive.
Buying an NFT because you like it, or even to make (or lose) a few quick bucks is one thing. But upsetting at NFT is another. Again, it is an incipient space. Even a Van Gogh painting or a rare Babe Ruth baseball malleable required little time in the old days to become very valuable.
Given the digital nature of NFTs, it is difficult to compare them to prized physical works of art such as statues and paintings. On the other side, we live in a world where a Bitcoin is worth more than $ 50,000, so things in the digital realm can certainly be very valuable and even continue that value for longer periods.
In any case, if you plan to turn NFT upside down, you will need to dive deep into this cumbersome world because each NFT market is slightly different. It’s costly too – trading Ethereum can be expensive enough as new network congestion is driving fees up. Finally, you will need to think strategically and follow the rapidly changing cryptocurrency trends.
In short, it is possible to win a ticket by investing in NFT, but you will have to do your homework.