Non-fungible tokens or NFTs can be described as smart tokens that are connected to digital (and sometimes physical) assets, thus offering proof of ownership. NFTs can have nearly endless applications, but they are most commonly used for artwork, music, videos, digital collectibles, and video game items, among others. The term “non-fungible” means the item is entirely unique, and cannot be interfered with or replaced with something else. Due to their uniqueness and verifiability, NFTs are one of the fastest-growing aspects of the crypto industry, and here is everything you need to know about them if you want to venture into this world as well:
Learn how NFTs work
NFTs use blockchain technology, which represents a distributed, decentralised database shared between the nodes of a computer network, and guarantees the security and fidelity of data. When NFTs are “minted” (or created), a smart contract is then recorded on the blockchain, along with a unique ID (or address) that functions as proof of ownership.
An individual can only own an NFT, and the information regarding the price, sale, and ownership all exists on the blockchain, being a traceable and public form of verification. When the NFT is sold, this transaction will also be recorded and accessible on the blockchain. In short, if you own an NFT, proving your ownership is quite secure and simple, and so will be any following sale of the token.
Know how to buy them
Even though buying NFTs might seem quite intimidating at first, the process is actually fairly easy. First, you will need to join a cryptocurrency marketplace like Crypto or Coinbase in order to purchase a cryptocurrency. Bitcoin (BTC) and Ethereum (ETH) still remain the top currencies to invest in, although it’s worth mentioning that most NFTs are built on the Ethereum blockchain.
Then, you will need to download a crypto wallet such as Exodus or Electrum for storing and controlling your cryptocurrencies and other digital assets. You will then have to transfer your coins from the crypto marketplace to your crypto wallet. Once your wallet is all set up, the final step is to join an NFT marketplace like OpenSea, Rarible, or Mintable. Here, you will be able to browse through different types of digital assets and purchase an NFT that appeals to you the most.
Start with digital art
A brilliant place to begin exploring NFTs is the increasingly popular world of NFT art. By minting an image on the blockchain, artists can create unique digital art that for the first time comes with a verifiable certificate of authenticity and ownership, thus truly turning them into prized possessions. And the art is absolutely fascinating as well, as we’ve already seen in images of monkeys and pixelated “punks”.
But a more innovative NFT Design Studio has truly taken this art to the next level. By combining technology with dynamic storytelling, these creatives provide some of the most stunning 3D animated tokens that are not only visually breathtaking and incredibly valuable, but also eco-friendly, helping to offset the often negative environmental impact of NFTs.
Learn to value NFTs
Before making your first large purchase, it’s worth knowing how to value NFTs. As NFTs continue to rise in popularity each day, NFT marketplaces exponentially grow as well. This means that most NFTs likely won’t appreciate, and assuming that all digital assets will go up in value in the future is a poor presumption.
To understand which NFTs will likely hold value, it’s advised to consider some crucial elements. For instance, is the project in limited supply, highly desirable, or created by a famous name? Does the NFT have a more practical use outside of simply being a digital asset, and is the project particularly interesting and unique? If the answer to some or even all of these questions is yes, chances are high the NFT will be valuable in the future.
Follow new progress
The world of NFTs truly exploded in 2021, with trading volumes reaching new, unimaginable heights. Not only were NFTs sold for staggering sums, but some big names have also decided to venture into NFTs and launch their own platforms, from auction houses like Sotheby’s and Christie’s to celebrities like Snoop Dogg, Tom Brady, and Ashton Kutcher.
At the moment, NFTs seem to be mainly focused on gaming, artwork, and crypto collectibles, with famous brands in all of these industries launching their own platforms last year. However, the potential of NFTs is much wider, including ticketing, warranties, software licensing, copyrights and intellectual property rights, as well as the sale and trading of both physical and digital assets. As NFTs are also an essential part of the increasingly growing virtual world “Metaverse”, their future potential is truly endless.
Having unique attributes, being entirely verifiable, and offering endless possibilities, NFTs truly seems to be a key component of the future. The guide above will have hopefully allowed you to learn more about these incredible tokens and enabled you to venture into the profitable world of NFTs as well.