If you’ve been keeping your eye on the ever-evolving world of a cryptocurrency over the past several months, then you likely have heard at least a bit about the new sensation known as non-fungible tokens, or NFTs. But whether you’ve heard about them or not, their fundamental nature and how they function may be a point of some confusion, as they are for many others. Thankfully, our team of trusted experts is ready and eager to clarify what NFTs are, how they work, and how you can get your hand on one by buying, making, and selling them. You may find that NFTs are the ticket you’ve been looking for to help you take better control over your financial future!
Looking to learn more about the basics of Crypto? Check out our Crypto terms every investor should know.
What Is a Non-Fungible Token (NFT), and How do They Work?
In short, NFTs are a type of cryptographic asset found on a specific blockchain(typically Ethereum) that contains unique metadata and identification codes that distinguish them from one another and prevent them from being replicated. NFTs can be utilized to represent different types of real-world items, like artwork and even real estate. Unlike fungible tokens- like cryptocurrencies– that are identical to one another and can be used as currency for commercial transactions, NFTs can’t be exchanged equivalently.
You can think of NFTs similarly to ultra-rare, one-of-a-kind Pokemon cards, coins, or even limited-edition Jordans. In short, they create a type of scarcity among available assets, and that scarcity is a significant part of what makes them valuable. They even come with a unique certificate of authenticity to prove their worth and uniqueness. Generally speaking, NFTs are typically used to claim, buy, and sell types of digital artwork that can take a massive range of forms, such as tweets, GIFs, images of physical objects, video game skins, and much more.
NFTs (non-fungible tokens) are unique digital collectibles with different identification codes. Unlike cryptocurrencies, NFTs are non-fungible, i.e., they cannot be exchanged for another NFT because each one is unique with its attributes. NFTs exist on blockchains; therefore, they cannot be replicated. Kevin McCoy and Anil Dash created the first-ever NFT called Quantum in the year 2014. Other renowned NFTs sold for millions include Beeple’s Human One, Everydays, Cryptopunk, #7523, and so on. Besides this, many digital creators and blockchain enthusiasts are minting NFT collections, including Coca-Cola, NBA, Eminem, Justin Bieber, Grimes, etc. The NFT craze is still booming, and many people say it will become the next big thing after Bitcoin. However, many people do not entirely understand the utility of NFTs beyond their value as collectibles. The NFT market touched $41 billion in 2021 from $100 million in 2020. This demonstrates that NFT is not just a fad craze with an asset with real value and utility. Although they have become a new fad amongst people to spend millions on, their utility is not well known.
Despite the popular conception that NFTs have no utility except being collectible, the utility of NFTs is expanding. Due to their scarce supply and collectibility, NFTs are becoming increasingly mainstream, with many brands creating their own NFTs. In this article, we will be discussing the utility of NFTs in the real world.
NFTS IN BUSINESS
The main utility of NFTs lies in their usage of blockchain technology. Blockchain is a distributed and decentralized public ledger that cannot be hacked. NFTs go beyond proving the unique ownership of a digital asset. NFTs can be used in any domain where ownership has to be confirmed. For instance, if house deeds exist as NFTs, they would become impossible to forge because NFTs can’t be altered. The same goes for many other businesses as well. This also saves time in searching for the document of ownership. Instead of finding ownership paperwork, NFTs can depict the entire ownership history of that particular item.
NFTs can be used in any field, from creating job profiles to applications for colleges. For instance, incoming college students could create an NFT of their profile and allow colleges to then bid on them for admissions and scholarships. NFTs not just offer utility but also high security.
SECURE TRANSACTION PLATFORM
Paper-based transactions are neither efficient nor sustainable. It requires a lot of human labor and paper documentation, which often gets misplaced. Cloud solves this problem; however, it creates new issues of authenticity, duplication, and fraud. With NFTs, users can get the best of both worlds. With an added layer of security, the NFT-based document becomes hack-proof and more efficient. Every party involved in the transaction can access NFT’s journey from creation to ownership. Thus, NFTs create a full-proof unhackable system that cannot be easily altered.
Some of the biggest names in the gaming sector, including Ubisoft, EA, and Square Enix, have announced their plans to include NFTs in their games. NFTs are natural extensions of in-app purchases, comprising around 95% of mobile gamers’ spending. The decentralization of in-app purchases ownership allows for a free exchange of in-game assets between gamers and even across different games. Game assets will empower developers and creations to make digital collectibles for everything, including their avatar, weapons, vehicles, etc.
ONLINE AND OFFLINE SOCIAL COMMUNITIES
Most people aware of NFTs would have heard of the Bored Yacht Club, an assembly of 10,000 NFTs that feature animated primates. People might be wondering why something as simple as an image of an ape would fetch $3.4 million. For once, the owners of NFTs from the Bored Ape collection get exclusive access to other like-minded individuals, including many celebrities. These people can discuss their common interests, such as investing and entrepreneurship.
As such, NFTs are VIP passes to exclusive clubs that offer unique benefits to their members. These clubs are not always virtual – they also extend to real-life physical spaces. For instance, the NFT collection VeeFriends, launched by the investor, social entrepreneur, and media tycoon Gary Vaynerchuk gives its members open access to VeeCon from 2022-2024. Additional benefits of such NFTs include direct mentoring sessions from Vaynerchuk himself. This demonstrates that the value of NFTs goes beyond unique ownership.
Many leading names, like Apple, Microsoft, and Meta, are heavily invested in building the metaverse. This immersive virtual space will grow at the rate of 13.1% annually for the next couple of years. Metaverse will be an integrated network of many virtual worlds with data continuity. This means that the new integrated Metaverse will allow its users to move their digital possessions between different virtual worlds, just like they move their physical assets while shifting to a new city. NFTs will be an essential component of the metaverse, allowing virtual assets in the digital world to be uniquely identifiable, exchangeable, and purchasable in NFT marketplaces.
HEALTH AND REAL ESTATE
In healthcare, NFTs might be able to provide unique digital identification in rural areas. Many countries will benefit from using NFTs to generate a public register to certify medical personnel and provide birth certificates.
In real estate, people can leverage NFTs to generable verifiable proof of ownership and documentation around historic land transfer and custody. Proof of ownership is still a problem in many countries, where land grabbing and single-source documents remain pretty common. NFTs could solve the confusion around ownership.
How Do You Make NFTs?
There are ways to buy and sell NFTs, which we’ll explore in the two sections below, but the cheapest way to get your hands on an NFT is to make your own, and the process is much easier than you might imagine! Anyone can create an NFT; all they’ll need is a digital wallet, a small amount of Ethereum cryptocurrency, and a connection to a specific NFT marketplace where they can upload and transform their content into an NFT.
Aside from that, the process of making an NFT only requires following a set of six simple steps:
Pick your unique digital asset to turn into an NFT
Choose your preferred blockchain
Set up your preferred digital wallet
Select your desired NFT marketplace
Upload your chosen file (such as a GIF, PNG, MP3, or another type of file) and transform it into an NFT
Set up your sales process and monetize your NFT
At a fixed price
Through a timed auction
Through an unlimited auction
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How Do You Buy NFTs?
In essence, any digital image or video can be purchased as an NFT. But there are a few essential things you’ll want to consider before making a purchase, especially if you’re new to the NFT game. You’ll first want to select the marketplace you want to buy from, get a digital wallet that the store requires, and ensure you have enough crypto to complete the sale. You’ll also want to closely watch out for marketplace fees, converting fees, and other closing expenses.
Some of the most widely used NFT marketplaces currently in operation include:
How Do You Sell NFTs?
Like when buying an NFT, you’ll first have toselect a specific marketplaceon which to sell your NFT. You’ll then need to research the selling process for that particular platform since the process can differ depending on the market you use. In simple terms, however, you’ll generally have to upload your content and transform it into an NFT, then provide some description information and choose your sale price. The majority of NFTs are purchased using Ethereum- since most NFTs exist on the Ethereum blockchain- but they can be bought with other tokens as well.
The most expensive NFT to date is a piece of digital art called “Everydays: The First 5000 Days” created by Mike Winkelmann, known as Beeple. It sold for an astonishing $69 million and is the highest-priced NFT ever sold at auction.
Beeple’s artwork consists of a collage of 5,000 drawings composed over 13 years–one image from every day of his life since 2007. Each frame serves as a snapshot into his past and explores themes such as climate change, politics, Covid-19 and more. This makes it one of the most unique pieces in the NFT space, and one that has been embraced by many in the industry.
Creating NFT art is a fairly straightforward process. All you need to do is create an artwork and upload it to an NFT marketplace, like OpenSea or Rarible. After uploading your art, you’ll need to set up your token: what type of asset it is, whether there are any additional terms & conditions associated with the sale and so on. Once you’ve done that, you can start selling your work!
NFTs come in all shapes and sizes – from digital artwork to tweets and music albums. The possibilities are truly endless when it comes to creating unique pieces of content for the crypto world. So if you’re feeling creative, why not give it a try?
Can I make NFT art of anything?
Yes! As long as the content you create is digital, it can be turned into an NFT. One of the most exciting things about creating an NFT is that you can make art from anything – a photo, a video, music or even just words! So don’t be afraid to experiment and explore different types of content for your own unique pieces. The sky really is the limit when it comes to NFTs.
NFTs are fast becoming a popular form of expression for many people in the crypto world. With their potential for creativity, innovation, and value, they’re sure to remain around for years to come.
What kind of NFTs sell best?
NFTs come in all different shapes and sizes. Some of the most popular NFTs are Digital Artwork, Collectible Cards, Music Recordings, Video Games, and Cryptocurrency Tokens. Ultimately what sells best will depend on your target audience and the type of NFT you’re selling. That said, many creators have found success with digital artwork as it’s relatively easy to produce and can be used for a variety of purposes such as making prints or creating virtual galleries.
Additionally, collectible cards can be great for building an engaged community around your brand or product. Finally, music recordings and video games have proven to be quite successful among collectors as they offer a more tangible experience than other types of NFTs.
NFTs gain value in much the same way as any other asset. They can appreciate due to things like scarcity, demand, and market forces. For example, an NFT with a very low supply (such as 1-of-1 unique digital artwork) would be more valuable than one with a high supply (like a limited edition collectible cards). Additionally, if there is high demand for an NFT from collectors or investors it could cause the price of said NFT to increase significantly.
Ultimately, the most important factor when it comes to an NFT’s value is its utility. If people are able to use your NFT in interesting ways or it provides some sort of benefit then there will likely be more interest.
Final Thoughts to Keep in Mind About NFTs Going Forward
Congratulations! You’ve officially been educated on the essential basics of NFTs and how to effectively get your hands on one, either by purchasing one for yourself or simply making your own. Now that you have this essential information under your belt, you can consider delving into the new and rapidly expanding NFT realm to try and start earning some serious money for yourself. If other industry novices are able to make hundreds of thousands and even millions of dollars by quickly creating and selling their unique NFTs, why can’t you?
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