- What is a Non-Fungible Token (NFT)
Non-fungible means that it’s unique and can’t be substituted with something else. For example, a bitcoin is fungible, it can be traded one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different. In other words, which means that hidden in those quirky artworks, there’s a unique and non-interchangeable unit of data stored on a digital ledger using blockchain technology to establish proof of ownership. Essentially the same, or similar technology used for cryptocurrencies like bitcoin and ether is used to guarantee the uniqueness of each NFT and to prove who owns it. Unlike a unit of bitcoin, however, each NFT is completely unique, so it can’t be exchanged like-for-like. The file stores extra information that elevates it above pure currency and brings it into the realm of, well, anything, really. As a result, NFTs have become collectible digital assets that hold value, just like how physical art holds value.
- How does NFT Work?
The unique identity and possession of an NFT are verifiable via the blockchain ledger. They were first launched on the Ethereum blockchain, but other blockchains including FLOW and Bitcoin Cash now also support them. Whether the original file is a JPG, MP3, GIF, or anything else, the NFT that identifies its ownership can be bought and sold just like any other type of art and, like with physical art, the price is largely set by market demand. If you wandered into a gift shop of an art gallery, you’d find a number of replicated prints of famous masterpieces, well there are some NFTs that act the same way. There are parts of the blockchain that are totally valid, but they wouldn’t hold the same value as the original. NFTs will most likely come with a license to the digital asset it points to, but this doesn’t automatically confer copyright ownership. The copyright owner may reproduce work and the NFT owner gains no royalties. Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT for more than $2.9 million. Essentially, NFTs are like physical collector’s items, only digital. So instead of getting an actual oil painting to hang on the wall, the buyer gets a digital file instead. They also get exclusive ownership rights. That’s right: NFTs can have only one owner at a time. NFTs’ unique data makes it easy to verify their ownership and transfer tokens between owners. The owner or creator can also store specific information inside them. For instance, artists can sign their artwork by including their signature in an NFT’s metadata.
- What is the use of NFT?
Blockchain technology and NFTs allow artists and content creators an inimitable opportunity to monetize their wares. For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT, which also lets them keep more of the profits. In addition, artists can program in royalties so they’ll receive a percentage of sales whenever their art is sold to a new owner. This is an attractive feature as artists generally do not receive future proceeds after their art is first sold. Art isn’t the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned off themed NFT art to raise funds for charity. Charmin dubbed its offering “NFTP” (non-fungible toilet paper), and Taco Bell’s NFT art sold out in minutes, with the highest bids coming in at 1.5 wrapped ether (WETH)—equal to $3,723.83 at the time of writing. Nyan Cat, a 2011-era GIF of a cat with a pop-tart body, sold for nearly $600,000 in February. And NBA Top Shot generated more than $500 million in sales as of late March. A single LeBron James highlight NFT fetched more than $200,000. Even celebrities like Snoop Dogg and Lindsay Lohan are jumping on the NFT bandwagon, releasing unique memories, artwork, and moments as securitized NFTs. NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art. Meanwhile, NFTs are shaking up the concept of in-game purchases in video games. Up until now, any digital assets bought inside a game still belonged to the game company with gamers buying them to temporarily use while playing the game. But NFTs means that the ownership of assets has shifted to the actual buyer. That means that they can be bought and sold across the gaming platform with extra value applied based on who has owned them along the way. Whole games are now being made based entirely around NFTs.
- How to Buy NFTs?
If you’re keen to start your own NFT collection, you’ll need to acquire some key items: First, you’ll need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, like Ether, depending on what currencies your NFT provider accepts. You can buy crypto using a credit card on platforms like Coinbase, Kraken, eToro, and even PayPal and Robinhood now. You’ll then be able to move it from the exchange to your wallet of choice. You’ll want to keep fees in mind as you research options. Most exchanges charge at least a percentage of your transaction when you buy crypto. NFTs are also making waves as in-game purchases in video games (much to the delight of parents everywhere, we’re sure). These assets can be bought and sold by players, and include playable assets like unique swords, skins, or avatars