NFT Explained

What is NFT?

The full form of NFT is “Non-Fungible Token”. The word Non-fungible is an economic term that can be used for items such as a song file,  furniture, or even your personal computer. Because of their unique qualities, some goods cannot be interchanged with other items. Non-fungible tokens are cryptographic assets on a blockchain that include unique identification codes and information that differentiate them from one another. They cannot be traded or swapped at equivalency, unlike cryptocurrency.

Fungible goods, on the other hand, may be swapped since their worth, rather than their unique features, identifies them. For example, ETH or USD are fungible since one ETH / $1 USD may be exchanged for another ETH / $1 USD.

From drawings, music, videos to an X-ray of a celebrity’s teeth,  NFTs can really be anything digital. However, a lot of the current talk is around using NFT to sell digital art, so much that some may misunderstand NFT to be just a trade of digital art.

How do NFTs work?

Non-fungible tokens, or NFTs, have grown in popularity, particularly among digital producers. Since it is non-fungible and cannot be replaced by another identical item, artists are increasingly using this one-of-a-kind cryptocurrency asset. Each token carries a unique, non-transferable identity that allows it to be different from other tokens. Hence they are true digital representations of assets that have also been compared to digital passports. NFTs, like Bitcoin, have unique ownership details that enable easy transfer and identification of these assets in between the token holders. Owners can also provide information or asset properties in NFTs.

The ERC-721 standard gave rise to NFTs. ERC-721 provides the minimal interface that is necessary for the exchange and distribution of gaming tokens like the ownership information, security, metadata, etc. The people that created the ERC-20 smart contract also created this new tech. The ERC-1155 standard expands on the notion by lowering the transaction and storage costs associated with NFTs and combining different types of non-fungible tokens into a single contract.

What are NFTs Used for?

The most evident advantage of NFTs is the increased market efficiency. Converting a physical item to a digital asset simplifies operations and eliminates intermediaries. The actual artists can communicate directly with their fans without the meddling of agencies since NFTs on a blockchain represent digital or physical artwork.

They may also be used to enhance company operations. An NFT for a wine bottle, for example, will make it easier for different players in a supply chain to communicate with it and will aid in tracking its provenance, manufacturing, and sale throughout the whole process.

Non-fungible tokens are also useful in identity management. Consider the example of actual passports, which must be produced at every point of entry and exit. NFTs may also be utilized for identity management in the digital environment.

By fractionalizing tangible assets like real estate, NFTs can help democratize investing. More than a physical real estate property, a digital asset is much easier to divide among several owners.

How to Buy NFT?

Many NFTs can only be purchased with Ether. Hence getting hold of some Ether and keeping it in a digital wallet is generally the first step. You may then buy NFTs from any of the online NFT marketplaces, such as OpenSea, Raible, or super rare.

Currently, most markets utilize the Ethereum network to power their transactions. To purchase an NFT, you will need Ethereum’s native coin Ether. If you do not have it, you may register an account with an exchange such as WazirX or Binance and buy the tokens there. You’ll also need to set up an Ethereum-compatible crypto wallet. A crypto wallet is a digital address where Cryptocurrency may be stored. Wallets may be created using services like Metamask, Binance, or Coindesk. After you open the wallet, you must transmit the Ether you purchased from the exchange to the wallet’s address. If not already created, then get an account on the marketplace that you like. The registration processes for various markets vary. Link your wallet to the marketplace. On the platform, most markets provide a simple ‘Connect wallet’ option. Browse the market and select an NFT that appeals to you. Most markets use an auction method to purchase NFTs; you must bid for the NFT you desire.

Following a successful bid, you will finish the transaction and the required money will be deducted from your wallet. Keep in mind that you may be required to pay a transaction charge to the marketplace, however, the amount may vary depending on the marketplace.

Are NFTs Mainstream Now?

Non-fungible tokens, or NFTs, have been around for a while, but the crypto-art boom is only getting started. The first step in bringing NFTs into the mainstream is institutional support. This is when Beeple and Christie’s come into play. Beeple, a crypto artist, made news after selling the highest-valued crypto art piece to date for a whopping $69 million. That amount alone is enough to turn heads, but what’s more significant is that a venerable auction house like Christie’s is joining in on the NFT action.

Celebrities are exploring the possibilities of digital art as a result of increased media coverage and industry expansion in the NFT area. Rima Kallingal, a famous Malayalam actress has recently entered the NFT industry. She just launched her genesis NFT project in the Ethereum-based NFT Marketplace, Foundation, including digital artwork which was titled ‘The Insurgent Bloom’. It was apparently inspired by the blossoming of a rare flower known as Neelakurinji in the hills of Munnar, Kerala.

NFTs: Why Can’t I Just Take A Screenshot?

As with any new technology, it may be difficult to understand what value it delivers in the early phases of adoption, especially for something ethereal like digital artwork.

Remember that time during the Baseball game when you strolled through the Team Store on your way out and decided to get some souvenirs to commemorate the occasion? Perhaps a Dodgers cap to commemorate a victory over the Yankees. If you truly wanted to save money, you might have bought a cheap replica someplace in Chinatown instead of the official Dodgers store. But we all know that in this situation, we’re getting more than just a cap, it is an emotion for our favorite team.

Similarly, with the advent of NFTs, you may now support your favorite creators as well. You are assisting them in continuing down their artistic path by purchasing their authentic products. And who knows, maybe in 20 years, the original Dodgers cap from the year they won the World Series that you bought at that game will be worth something to someone.