What is an NFT(Non-Fungible Token)?

NFTs are digital assets that represent real-world objects such as art, music, game items, and videos. They can often be bought and sold online using cryptocurrencies and are usually encoded using the same underlying software as many cryptocurrencies. It has been around since 2014, but is now becoming more popular as the way to buy and sell digital art is becoming more and more popular.

Since November 2017, $174 million has been spent on NFTs. NFTs are also usually one of a kind, or at least a very limited version, and have a unique identification code. “Essentially, NFTs create digital scarcity,” said Arri Yu, president of the Washington Technology Industry Association Cascadia’s Blockchain Committee and managing director of Yellow Umbrella Ventures.

This is in stark contrast to most digital creations that are almost always endless. Hypothetically, a supply disruption should increase the value of this asset if there is demand. However, many NFTs were digital creations that already existed in some form elsewhere, at least in these early days, such as iconic video clips of NBA games or securitized versions of digital art already circulating on Instagram.

For example, renowned digital artist Mike Winklemann, better known as Beeple, composes 5,000 paintings each day to create the most famous NFT to date, EVERYDAYS: The First 5,000 Days, sold at record prices at Christie's. $69.3. million.

Anyone can view individual images or entire image collages on the Internet for free. So why are people willing to spend millions of dollars on something they can easily screenshot or download? Because  NFT allows the buyer to own the original item. In addition, it includes built-in authentication to act as proof of ownership. Collectors value this "digital brag" more than the item itself.

How is NFT different from cryptocurrency?

NFT is not a replaceable token. They are typically built using the same type of programming as cryptocurrencies like Bitcoin or Ethereum, but the similarities end here.

Physical and cryptocurrencies are “fungible”. That is, they can be sold or exchanged for each other. Also, the value is the same. One dollar is always worth another dollar. One Bitcoin is always equal to another Bitcoin. The fungible potential of cryptography makes it a reliable means of conducting transactions on the blockchain. NFTs are different. Each is digitally signed, making it impossible (and therefore not interchangeable) to exchange NFTs with each other or make them identical. For example, one  NBA Top Shot clip is not equal to EVERYDAYS  because both are NFTs. (One NBA Top Shot clip is not necessarily the same as another NBA Top Shot clip.)

How does NFT work?

NFTs exist on a blockchain,  a distributed public ledger on which transactions are recorded. Blockchain is probably the most familiar process for enabling cryptocurrencies. In particular, NFTs are also supported by other blockchains but are usually stored on the Ethereum blockchain.

NFTs are created or “issued” from digital objects that represent both tangible and intangible items, including:

• Art

• GIF files

• Video and sporting events

• Collectibles

• Virtual avatars and skins for video games

• Designer sneakers.

• music

Tweets are also counted. Twitter co-founder Jack Dorsey sold his first tweet on NFT for over $2.9 million. Basically, NFTs are like physical collectibles only digitally. So the buyer receives a digital file instead of hanging the actual oil painting on the wall. They also receive exclusive property rights. Yes. An NFT can only have one owner at a time. Unique NFT data makes it easy to verify ownership and transfer tokens between owners. The owner or author may also store certain information. For example, an artist can sign work by including the signature in the NFT metadata.

What are NFTs used for?

Blockchain technology and NFTs offer artists and content creators a unique opportunity to monetize their products. For example, artists no longer have to rely on galleries or auction houses to sell their work. Instead, artists can sell directly to consumers with NFTs, keeping the majority of their profits. Artists can also program their royalties to receive a percentage of sales whenever their work is sold to a new owner. This is an attractive feature, as artists usually don't get any future income after their work is first sold. Art isn't the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned off NFT-themed art to raise funds for charity. Charmin called her to offer "NFTP" (non-fungible toilet paper), and NFT Taco Bell's artwork sold out in minutes, with the highest bid in 1.5 Wrapped Ether (WETH) being $3,723.83 at the time of writing. Nyan Cat, a 2011 GIF of a beautiful cat, sold for nearly $600,000 in February. And at the end of March, NBA TopShot's sales exceeded $500 million. LeBron James' single NFT focus brought in over $200,000. Celebrities like Snoop Dogg and Lindsay Lohan have also joined the ranks of NFTs, revealing unique memories, artworks, and moments in the form of securitized NFTs.

How to buy NFTs?

If you want to create your own NFT collection, you will need to purchase a few key items. First, you need a digital wallet that can store NFTs and cryptocurrencies. Depending on the currencies your NFT provider accepts, you will likely have to buy some cryptocurrencies like Ether. You can now buy cryptocurrencies with your credit card on platforms like Coinbase, Kraken, eToro, and even PayPal and Robinhood. After that, you can go to the wallet of your choice on the exchange. You'll want to keep fees in mind when researching options. Most exchanges charge a minimum percentage of the transaction when purchasing cryptocurrencies.

Some of the popular NFT marketplaces are OpenSea.io, Rarible, and Foundation