Recently, the internet got flooded with podcasts, news, and articles about NFTs. The sudden hype led to the curiosity of what is non fungible tokens. The recent headlines popped up saying that the artist Beeple sold one NFT at the renowned Christie’s Auction House for $69 million.
If you’re still wondering what is NFT and what’s the obsession with them, then your curiosity is about to meet its end. For starters, NFT is a digital currency that is here for the long haul to change the way media, music, art, and intellectual property are managed.
Through this article, you’ll get an in-depth understanding of what NFT is, why it’s used, its benefits, how it works, how to buy or sell NFT, and what’s its future. So, let’s start.
What are NFTs?
Numerous people have the same query over the internet nowadays – “what is NFT.” Well, NFT is a digital currency, and it’s abbreviated for non-fungible tokens. NFT is a distinctive and disparate data unit that’s hidden beneath the idiosyncratic artwork and stored on a digital ledger to establish proof of ownership for digital paintings.
NFT uses blockchain technology for this purpose. This is the same technology used for several cryptocurrencies like ether and bitcoin, which ensures the uniqueness of every NFT art and proves its ownership. Now you may ask, what is NFT art? Same as NFT, NFT art is an entirely new way of sorting digital artworks for easy and seamless monetization of the designer’s artwork.
Unlike a bitcoin unit, every NFT unit guarantees complete uniqueness, so it cannot be simply exchanged for a trade-off. The file stockpiles additional data that boosts it above pure currency and introduces it into the dominion of almost anything. This is why NFTs have become attainable and collectible digital assets that hold value and utility similar to any physical artwork.
You can store any form of an easily replicated digital file as an NFT to determine the original copy. In most cases, the NFTs that people have likely seen or read are stamped from trippy futuristic motion illustrations. Any sort of video file, music, art, or photography can be used to make NFTs. Moreover, memes and tweets are now made into NFTs.
If you have got a brief idea of what is NFT, you must know that you can create NFTs with practically anything unique, which holds value and can be stored digitally. NFTs have emerged as another collectible item, like a vintage action figure or a painting. However, you will not buy a physical item but instead pay for a digital file with ownership proof of the original copy.
Why use NFTs?
If you’re curious about what is NFT, then you may also want to know why people use it. Well, the answer is here. NFTs are mostly linked with video games, and this linked association makes sense too.
With the increase in digital assets getting tokenized, you’ll witness a shift in the way games are developed and designed. This will especially happen for games that enable players to earn rewards or assets of some sort on a daily basis. The future may witness the use of NFTs as a reward system for playing games of possibility.
For making NFTs or non-fungible tokens easier and more convenient for players and developers, the ERC-1155 standard has been powered by Enjin Coin. Apart from being forward-compatible with the upcoming NFT standards, the ERC-1155 token model can easily fit into a single transaction, making it ideal for gaming motives. However, for non-fungible tokens and gaming, it’s vital to keep in mind that the literal value of NFTs depends on their uniqueness, not just their in-game rarity.
Below are some possible use cases of NFTs in today’s digitized world:
- If a digital asset is initially sold in short supply, it can be traded and resold without any restrictions once the genuine buyer no longer wants to keep it. This enables the steadfast possession of digital assets, which will qualify developers and players in several significant ways.
- Whether it’s swords, helmets, houses, or cars, any virtual object in a game can be used as NFT.
- With specific abilities or events, a developer can choose to create unique digital assets while enabling various gameplay styles.
- NFTs are also widely used as collectibles. Players can start collecting items with distinctive properties, which they can flaunt to other players in the game.
Benefits of NFTs
If you’re learning what is NFT, then you must not miss what benefits come with this digital currency. Below are two benefits of NFTs, so take a look.
- Unlike fungible tokens, you cannot spend NFTs multiple times for a single transaction. This is why NFTs are impossible to get copied or duplicated. It also makes things easier for projects that utilize Ethereum’s blockchain technology for managing their supply seamlessly as they know the exact number of digital assets that subsists at a particular time.
- NFTs are impossible to get stolen or inflated. Thus, it becomes easier for developers to control and handle their projects’ supplies while adhering to the pertinent government guidelines. As NFTs live on the blockchain, they are considered rare digital assets that can be traded with minimal or no risk of fraud.
How do NFTs Work?
By now, you’re halfway there to understand what is NFT, but one of the most crucial things to know is how it works. The ownership and unique identity of an NFT is provable with the help of the blockchain ledger. Ethereum blockchain was first used for launching NFT, but sooner, other blockchains like Bitcoin Cash and FLOW also supported NFT.
Regardless of the original file, be it GIF, MP3, JPG, or anything else, the NFT that recognizes its ownership can be purchased or sold similar to all other types of artwork. Similar to physical art, the market demand determines and sets the price.
If you go and take a look around an art gallery’s gift shop, you’ll explore numerous replicated copies and prints of renowned masterpieces. Well, some NFTs act in a similar way. Some parts of the blockchain hold true validity, but they won’t have a similar value as the original.
NFTs mostly come with a license and authority to the digital asset. However, it doesn’t generally grant any copyright ownership. The NFT owner will not enjoy any royalties if the copyright owner replicates the work.
How to Buy and Sell NFTs?
Your quest to get a detailed insight into what is NFT is almost there to meet its end. Everyone should know a few things before they enter into any buying spree. If you want to buy an NFT, you’ll need a digital wallet to store it. And the following requirement is too obvious: you’ll need cryptocurrency. NFT providers widely accept Ethereum as cryptocurrency.
You can directly visit the website that’s providing the NFT to buy Ethereum, or you can simply transfer it from any crypto exchange. Some popular websites that will help you to buy NFTs include Rarible, Foundation, and OpenSea.io.
For selling NFT, you have to visit your account and find the piece from your collectible digital items. Once located, you have to click on it. A “sell” button will appear. Click on it, and you will be taken to another page. On the follow-up page, determine the pricing and condition for its auction. It’s crucial to know that the selling process of NFT differs from one marketplace to another. If you manage to sell NFT, you’ll get tokens in the form of Ether or ERC-20. Some popular websites to sell NFT are Axie Marketplace, SuperRare, VIV3, etc.
What is the Future of NFTs?
With the exponential increase in the hype around NFTs, there has been an upsurge in the number of NFT development companies globally. With the best NFT development company available in several parts of the world, numerous people are now taking a step forward to using NFT as a digital asset.
With the comprehensive understanding of what is NFT, it’s time for you to know what the future beholds of this digital currency. Well, the success of NFTs is unparalleled as the past success of any technology, or the internet cannot be utilized for the prediction of NFTs’ popularity.
As mentioned in the early section of this article, a digital artwork got recently auctioned at Christie’s. The purchaser used the pseudonym “Metakovan” to buy the NFT for $69 million. It became a pioneering moment for the NFTs’ advocators.
This sale has led to an undulating effect, and multiple NFTs allured million-dollar purchasers. With the significant amount of money coming into NFTs, numerous people got induced and dived into this digital currency pool.
Thus, it’s safe to say that NFTs are the future of digital currency and digital transactions. NFTs are also at a depth of the Arianee Protocol, which ensures digitally verifying any physical luxury item.
The protocol will help you to get proof that what you’re holding in your hands is what it claims to be. Apart from such great assurance, the Arianee ecosystem ensures a new and elevated type of ownership, which is all verified on the blockchain.
Multiple buyers have started to show interest in NFTs after stories got spread around the world that NFTs are captivating millions of dollars. Thus, with a new digitized era, NFTs have a long way to go in the future.