NFT, or non-fungible token, has become a booming market.
Whatever you feel about them, the NFT has certainly caused a splash. Even since that $69.3 million sale hit the headlines, they’ve been big news. And though some are debating the longevity of the phenomenon, others are convinced they are here to stay.
This article aims to explain everything a beginner needs to know about NFTs, including what they are, how they work, why they’ve caused some controversy and how you can get involved.
What is an NFT?
An NFT is, in essence, a collectible digital asset, which holds value as a form of cryptocurrency and as a form of art or culture. Much like art is seen as a valuable holding investment, now so are NFTs.
NFT is a digital token that’s a type of cryptocurrency, much like Bitcoin or Ethereum. But unlike a standard coin in the Bitcoin blockchain, an NFT is unique and can’t be exchanged like-for-like.
But what makes an NFT more special than a run-of-the-mill crypto coin? The file stores extra information, which elevates it above pure currency and brings it into the realm of anything. The types of NFTs are super varied, and they could take the form of a piece of digital art or a music file – anything unique that could be stored digitally and be thought of to hold value. Essentially, they are like any other physical collector’s item, but instead of receiving an oil painting on canvas to hang on your wall, you get a JPG file (or PNG, GIF, etc.)
How do NFTs work?
NFTs are part of the Ethereum blockchain so they are individual tokens with extra information stored in them. That extra information is the important part, which allows them to take the form of art, music, video and so on. In the form of JPGS, MP3s, videos, GIFs and more. Because they hold value, they can be bought and sold just like other types of art – and, like with physical art, the value is largely set by the market and by demand.
That’s not to say there’s only one digital version of an NFT art available on the marketplace, though. In much the same way as art prints of an originalare made, used, bought and sold, copies of an NFT are still valid parts of the blockchain – but they will not hold the same value as the original.
Now, you may think, “Why should I just download an NFT?” The answer is quite simple, the downloaded version won’t hold the information that makes it part of the Ethereum blockchain, which means it doesn’t worth much.
Where can I buy NFTs?
NFTs can be bought on many platforms, or marketplaces. Because of the high demand of many types of NFG, they are often released as “drops.” This means a frenzied rush of eager buyers when the drop starts, so you’ll need to be registered and have your wallet topped up ahead of time.
One of the biggest marketplace is OpenSea. You can also quickly register a wallet and an account and start trading.
One thing to keep in mind though is OpenSea does charge a one time “gas fee” for your initial buy or sell. And this gas fee can fluctuate with the price of Ethereum.
Who’s been using NFTs?
NFTs are definitely having a moment, with creators of NFT art including artists, gamers and brands across the spectrum of culture. In fact, it seems every day brings a new player to the NFT marketplace.
Especially for artists, stepping into the NFT space adds another format to create and share art – and offers their admirers another way to support their work. With pieces ranging from small, quick-to-make GIFs to more ambitious works, artists can offer the public a range of ways to buy art and make money in the process.
So what are you waiting for? Create an account and start selling NFTs. Who knows, may be one your childhood painting can worth millions of dollars in the marketplace.