You might’ve heard of multi-million dollar auctions of digital assets like arts, GIFs, and memes. Haven’t you? If not, you would’ve undoubtedly heard about the famous Nyan Cat being sold for $516,000 in an NFT auction. Hearing all this astonishing news, you must be wondering what NFT is, how it works, and why it has so much hype?
In this article, we’ve explained what NFT is and how it works. And if you’re planning to own some NFTs, then read through this whole article.
What is NFT?
NFT stands for non-fungible token. It is a digital asset used to represent ownership of distinct objects. Through NFT, things like in-game items, artwork, and other unique items are under the possession of a single owner at a time and are secured by the Ethereum Blockchain. NFTs are bought and sold online, usually through cryptocurrency.
Through NFT, the creators can monetize their work quickly, and collectors can efficiently acquire and store valuable items.
What is NFT Used For?
NFT is used to represent the ownership of particular real-world items. It helps to tokenize digital artwork, GIFs, memes, tweets, collectibles, in-game gadgets, and even virtual real estate.
Although it initially started in 2014, NFT got much hype in 2021. 2021 is rightly called “the year of NFT” as this year marked the ascent of non-fungible tokens(NFTs). In early 2021, NFT sales went up to a size of tens of millions of US Dollars.
How Does NFT Work?
NFT has the ability to claim ownership of a unique piece of a digital asset preserved by the Ethereum blockchain. Only one owner can own a specific NFT at a time. This ownership is maintained by a unique ID and metadata that no other NFT can reproduce.
Every NFT is unique, and no one can exchange them for another NFT. In contrast, cryptocurrency is fungible and can be exchanged.
Why is NFT important?
NFT gives ownership rights for digital assets. It is not divisible and can’t be divided into many owners. Selling an NFT can provide monetary benefits to the creators. Artists get a percentage of money when their art piece is traded to a new owner. Collectors can own a long list of collectibles in their wallets by getting NFTs.
NFT can be a valuable asset, and its monetary value can increase several folds depending upon the buyers and the marketplace.
How to Buy NFT?
To buy NFT, you first need to have an Ethereum-compatible crypto wallet. As most marketplaces for NFT accept Eth tokens only, you should add some Ethereum to your wallet. Then you can purchase NFTs from its marketplace. OpenSea is the largest marketplace for NFTs and crypto collectibles.
Prices of NFTs range from multi-million Dollars to a few Dollars. It depends mainly on the quality of the program and its rarity.
NFT is indeed an innovative application of blockchain technology. By providing a specific individuality to collectibles, their use will continue to grow in business applications. However, we still need to see the future of the promises that NFT makes to the investors.