What is an NFT – Non-Fungible Token Explained

In the 17^th century, exotic Dutch tulips were a rage with a selling value of insane dollars. Likewise, if we talk about today, non-fungible tokens or NFTs have taken the world by storm. So, is NFT really the way to unprecedented gains or is it just some hype? Are you planning to buy NFT but not sure about the investment?

If so, it’s time for you to relax and give this article a few precious important minutes of yours to gain even precious insight about NFTs. But before that, let’s take a look at the impressive NFTs stats

• Worth of NFT market is about $22 billion
• The NFT market has increased by over 20x from 2020 to 2021
• The top three NFT projects have crossed $2 billion worth of sales
• 2000 NFTs were launched in the initial four months of 2021 by Nifty Gateway

What is an NFT? How do NFTS Work?

If you Google “What is NFT,” a lot of complex terms and sentences will explode your head and kill your NFT journey even before it begins. Not letting you get into that zone, here’s a simplified yet clear description.

Any digital asset backed by blockchain is termed as an NFT. It could be anything from music to painting, drawing, some art, etc. that has the possibility to be converted into a digital format. This means, anyone who has non-fungible tokens has one-of-its-kind collectible that no one else has.

Wondering what makes NFTs unique? Well, it’s the undistinguishable information embedded inside them, thereby making them authentic.

Majority of the non-fungible tokens are created as well as stored on the Ethereum Network. Each NFT has a single owner at a time and their ownership is handled via the unique ID and metadata that is impossible to be replicated in any other token. Smart contracts mint and assign the ownership of the NFT along with governing its transferability. When an NFT is minted, a code stored in the smart contracts is executed and it conforms to various standards like ERC-721. Now this information is added to the blockchain where the NFT is managed.

Check out a few valuable considerations to keep in mind:

• Each NFT acts as a unique token
• NFTs are purchased & sold online
• Ownership of the NFT can be proved
• Being immutable, ownership of non-fungible tokens passes from person to person
• Original owners can earn a small percentage of profit on each transaction wherein the NFT participates
• An NFT cannot be replaced with duplicate or fake substitutes

Why are NFTs Evolving Drastically?

Anything that creates value always evolves and NFT is one such thing.

According to Emergen Research, Non-Fungible Token (NFTs) market size will reach USD 3,57,316.3 Million in the year 2030. Furthermore, with the massive pace with which NFTs are being adopted & deployed in Supply Chain and Logistics, their future seems beyond bright. Also, demand for decentralized marketplaces is another promising reason behind the evolving industry growth.

COVID-19 has encouraged people around the world to opt for a sedentary lifestyle. Restriction to stay indoors and refrain from meeting each other has pushed everyone to look for alternatives in order to stay in touch with their social circle. Owing to such reasons, a number of individuals got engaged in different metaverse platforms so as to enhance social participation & benefit from NFTs via the very fruitful exposure to it.

Non-Fungible tokens have the ability to enter into almost every sector, which is why; it has turned appealing for the audiences. For instance, today, artists can monetize their art by connecting with their fans, capitalizing the opportunities and creating a robust portfolio.

Going further, in the gaming world, NFTs act as the pillar to form a solid base that can make way for sustainable, profitable and expansive secondary markets. By providing players the revenue model, NFTs are changing the fate of online gaming by enabling the players to resell their purchased assets and create a high-value game in the marketplace.

Are NFTs and Cryptocurrencies Different?

NFT and Cryptocurrency, both are built on blockchain with the same principles and technology. However, NFTs can be purchased and sold through cryptocurrency.

While an NFT refers to unique assets, emphasizing on the real-world items like music, photos, and trading cards; cyrptocurrency is a kind of encrypted digital currency.

An NFT is managed in a digital ledger and is purchased and sold online. To buy an NFT, one need not purchase a real photo; instead, they can buy an original digital file. Since it is unique from fungible tokens, it can be interchanged. Non-fungible tokens have particular values with authenticity certificates. In simple words, this means that the digital assets can neither be exchanged nor replaced owing to the fact that every NFT exists on a blockchain based decentralized digital platform.

Moving on to cryptocurrency, being an encrypted form of digital currency (as said above), it does not need any financial institution for verification of transactions and is stored in a digital wallet. As a peer-to-peer system, it allows sending and receiving payments. Whenever cryptocurrency is transferred, a public ledger records the transaction. In order to purchase a product or service, one must exchange real currency for the cryptocurrency.

What is an NFT Art? Is it only for the Artists?

Existing in the digital universe, an NFT is a digital asset that can’t be touched or felt but owned. An NFT art is a form of digital file like an article, meme, artwork or music.

Boom in NFTs has favoured the artists or creators by giving them the right to rent, sell as well as display their digital artworks. Upon getting the legal ownership of their work, they can enjoy recognition for their efforts and hard work.

NFT art is a modern-age way of categorizing digital artworks and letting the creators make handsome without going chasing the clients. Not to forget, NFT art also has royalties for the artist. Having said that, whenever an artwork is sold, its artist gets a decent percentage of the future sales.

The Top 5 NFT Types

For the year 2022, check out the top five NFTs to have high expectations from

NFT art

NFT art allows artists showcase their art and benefit from it without the need of curators, distributors and galleries. This is the reason behind the increase in number of visitors on NFT artwork marketplaces. Beeple’s Everyday-the First 5000 Days is the most expensive art sold till date. On March 2021, it was auctioned for US$69 million.

NFT music

Without relying on the record labels, NFT music artists can garner sales from the charm of their music. With more and more artists entering the NFT music platform, NFT music has a mindboggling future waiting for it.

NFT games

NFT games allow players to accumulate rewards that can be traded as NFTs. CryptoKitties is one of the first NFT games that earned sales of US$4 million till September 2021. A number of companies have eyes set in NFT games, thus, letting players turn game into a full-time job opportunity.

NFT fashion

Luxury brands like Gucci and Karl Lagerfeld are busy in designing couture, bags, video games and a lot more to bite a piece of the NFT pie. Needless to say, NFT fashion will open revenue opportunities for designers all over the world. To take transparency to new level in the fashion industry, in April 2021, Prada, along with Cartier and Louis Vuitton had announced the launch of Aura Blockchain Consortium, which is a global blockchain for elite buyers and brands.

NFT memes

Meme artists and creators can now earn smart profits in exchange of making people laugh. 2022 looks great for NFT memes, as it will become the way for both, i.e. earning and taking ahead the entertainment industry.

Can I Create My Own NFT?

Of course, you can mint and sell NFTs freely! Cash in on the current sensation and reap rewards from it by following the below steps

1. Choose your Pick – First things first, decide which asset you are looking forward to turn into an NFT. Make sure it is unique and is owned solely by you, i.e. you own its intellectual rights.
2. Choose the Blockchain – Now comes the turn to mint the digital asset into an NFT. To do so, carefully determine the blockchain technology you want to use.
3. Set up the Digital Wallet – If you have a digital wallet already, great; but if you don’t, set up one to create the NFT. This wallet will help you in accessing your digital asset. Upon setting of the wallet, buy some cryptocurrency.
4. Select the NFT Marketplace – Research every NFT marketplace to choose a platform that’s meant for your NFT. Once you are sure about which NFT marketplace to go with, connect it with your digital wallet. This step lets you pay the fee that’s required to mint the NFT as well as hold sales proceeds.
5. Upload the File – By following the step-by-step guide of the NFT marketplace chosen by you; upload the digital file into the platform. You can turn the digital file into a marketable NFT.
6. Set the Sales Process – Decide the way you want to monetize your NFT. Based on the platform you can:
7. Set a timed auction
8. Sell at a fixed price
9. Initiate an unlimited auction

Also Read: How to Mint NFT

The Best NFT Marketplaces to Buy, Sell & Create NFTs

Sailing in the sea of dilemma while deciding which marketplace to trust for buying, selling & creating NFTs is a real problem. Thankfully, the solution to this is listed below for anyone who is facing a hard time in deciding the reliable NFT marketplaces to buy, sell and create NFTs. Here we go

1. OpenSea
2. Foundation
3. Rarible
4. Nifty Gateway
5. Coinbase NFT
6. MakersPlace
7. SuperRare
8. Mintable

Legal Rights of an NFT Buyer

Buyers can buy NFTs, but can’t buy the license to completely own it. Sounds harsh but that’s what the reality is for anyone who is an NFT buyer. Though they have the ownership to consider the digital asset their property, they can’t claim rights to the work. On that note, an NFT buyer can’t

• Make the NFT available to the world or display in public
• Reproduce/copy the NFT
• Sue for infringement of copyright, in case someone reproduces/copies the NFT

To claim 100% right to the work, the buyer must possess the assigned copyrights (written & signed) by the original creator of the NFT.

Why the Price of Some NFTs is High?

• $500,000+ for an animated Gif of Nyan Cat
• $6m+ for digital musical art
• $69m for digital art

What are these? Well, these are the selling prices of NFTs art. Looks insane but these figures are real. Despite finding it hard to digest the hefty prices of NFTs, figuring out the reasons behind is a good idea. NFTs prices are high probably because

1. The technology is not just new but is in its infancy too.
2. Current supply of NFTs is limited.
3. Non-fungible tokens offer phenomenal service by enabling people to acquire own digital assets that are impossible to be hacked or taken away.
4. Government bodies or authorities can’t stop anyone from having them.
5. Code that manages and controls an NFT is stored on blockchain, thus, enhancing its security.

How to Store NFTs Securely?

Cold-storage hardware wallet like Trezor or Ledger is the most secured way to store the NFTs. Reason being, hardware wallets and important details like password, phrase and touch authentication are there in the device only. As a result, keyloggers and hackers can’t access it.

Software wallet like Coinbase NFT or Metamask are used as well, but their safety can be compromised, as the information to access the wallet is in the software that’s stored online. If a hacker gets access to one’s computer or phone, it is easy for them to access the wallet, which often leads to scams.

Are NFTs the Future?

The straightforward answer to this is- only time will tell. No doubt experts are split over it with their own predictions and calculations, nothing definite can be concluded.

Does that mean sitting on hands? Not at all, at least in the present time. As a brand, you can get the best out of. Put forth your creativity and blend it with value. Take some inspiration from the NFT projects that are on their way to fuel the creator economy.

Let your audience and followers become your support system and help you earn rather than confining your talent into the policies set by companies, advertisers and brands. Grab the ownership of your work and lay the foundation of a stable future.

Talking about companies, they are already incorporating NFTs in even marketing strategies and making huge profits. Not only reputed but many NFT based startups are also doing well.

All in all, nobody knows the future but looking at the current scenario, NFTs will stay for sure. If the tokens show silver lining beyond gaming and other applications, nobody can stop NFTs from proving their mettle.

NFTs Sold with Huge Price till 2022

Hold your horses, as the prices of these most expensive NFTs sold till date might make you jump out of your seat.

1. The Merge – $91.8m
2. Everydays: the First 5000 Days – $69.3m
3. Clock –  $52.7m
4. Beeple’s HUMAN ONE – $28.985
5. CryptoPunk #5822 – $23.7m
6. CryptoPunk #7523 – $11.75m
7. CryptoPunk #4156 – $10.26m
8. CryptoPunk #3100 – $7.67m
9. CryptoPunk #7804 – $7.6m
10. Beeple’s Crossroad – $6.6m

Are NFTs Really Important for Metaverse?

NFTs and Metaverse are a match made in heaven.

In the metaverse ecosystem, NFTs act as the chief concept, as they allow individuals own virtual goods like accessories, cars, real-estate and what not. Built on the blockchain technology, non-fungible tokens give ownership to their holders. For example, if a person has a land in the metaverse, they can have an NFT as deed to this virtual property. In easy words, it means they are the lawful owner and hold access to the location in metaverse. Also, they can give the access to those they wish.

Conclusion

NFTs journey has just begun and has a long way to go. Being in infancy, it is slowly and gradually moving away from areas like gaming and art to ticketing, DeFi and digital identity.

Thanks to the expanding decentralized finance sphere, quality as well as quantity of non-fungible tokens will definitely accelerate in the coming time.

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