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NFTs explained: what they are, and why they’re now worth millions

23 Jun 2021

BlockchainDigital Transformation

There’s nothing like an explosion of blockchain news to leave you thinking, “Um… what’s going on here?” That’s the feeling many of us have experienced while reading about Nyan Cat being sold as one. And just when we all thought we had a handle on what was going on, Twitter’s creator placed an autographed tweet up for sale as an NFT. You might be thinking: what is an NFT, anyhow? Continue reading to learn more.

What does NFT mean?

Non-fungible token.

It still isn’t obvious, right?

So, what is an NFT? 

Non-fungible basically means that it’s one-of-a-kind and can’t be substituted with anything else. A bitcoin, for example, is fungible.

A digital asset that represents real-world elements like art, music, in-game items, and videos is known as an NFT. They’re bought and traded online, often using cryptocurrency, and they’re usually encoded with the same software as many other cryptos.

How do NFTs work? 

Most NFTs are, at a high level, part of the Ethereum blockchain. Ethereum, like bitcoin and dogecoin, is a cryptocurrency, but its blockchain also enables these NFTs, which store additional information that allows them to function differently from, say, an ETH coin. It’s worth mentioning that various blockchains can use NFTs in their own ways.

What’s worth getting at the NFT supermarket?

NFTs can be anything digital (drawings, music, even your brain being downloaded and transformed into an AI), but the current buzz is focused on exploiting the technology to sell digital art.

Do people truly believe this will become a form of art collecting?

Some individuals sincerely wish so, such as the one who paid approximately $390,000 for a 50-second video by Grimes.

NFTs can function similarly to any other speculative asset in that you buy it and hope that its value rises over time so that you can sell it for a profit.

So each NFT is unique?

Every NFT is a unique token on the blockchain in the technical sense. However, it could be like a van Gogh painting, with only one definitive edition, or it could be like a trading card, with 50 or hundreds of numbered copies of the same artwork.

What’s the story behind NFT?

If you heard that there were kittens involved, it’s a totally true story…

When the Ethereum blockchain implemented support for NFTs as part of a new standard, they became technically possible. Of course, a game called CryptoKitties, which allowed users to exchange and sell virtual kittens, was one of the earliest applications. Internet, thank you.

Dogecoin isn’t an NFT, but this GIF of a dogecoin is:


NyanCat on OpenSea

How to make NFT

The very first thing you must do is choose the artwork. Any digital file can be represented by non-fungible tokens. Anything that can be saved as a multimedia file qualifies. After all, the NFT game is all about turning infinitely reproducible digital artwork into „unique” pieces.

It’s time to get some Ether once you’ve decided on your digital asset.

NFTs can be created on a variety of blockchains, but for the sake of simplicity, we’ll assume you’ll use Ethereum. That’s the most popular, and it’s supported by the most well-known NFT marketplaces.

It’s possible that minting an NFT will be pricey. As a result, you’ll need an Ethereum wallet and some Ether (the coin on which Ether is based).

“MetaMask” is one of the simplest to use. It’s a free app that you may get on your iPhone or Android phone. The price demanded for the NFT is quite variable. Have at least $100 in Ether, but keep in mind that depending on the daily operational price, the minting process could cost you much more.

But why would anyone buy an NFT?

They are unique. An NFT’s information effectively allows a creative to digitally „autograph” their work. If you buy the NFT, you’re buying something unique, even if an image or piece of music has been shared hundreds of times.

What are NFTs used for?

  • Digital content
  • Gaming items
  • Domain names
  • Physical items
  • Investments and collateral

Check the Most Expensive NFTs Sold to Date:

Takeaways

  • Nonfungible tokens prove ownership of a digital item – image or text – just as people own crypto coins.
  • Unlike cryptocurrencies, which are all the same and have the same value, NFTs are one-of-a-kind.
  • An NFT is worth as much as the buyer is prepared to pay for it, which can be a lot if the NFT was created by a well-known artist and the buyer is a wealthy collector.

How will NFTs be used in the future?

Individuals’ rights to certain assets may be held, denied, or restricted by NFTs. The ability of NFTs to display proof of actual ownership of specific assets on the blockchain has prepared the path for a rapid expansion of their uses. Because of their ability to verify the uniqueness and scarcity of information on digital platforms, NFTs are extremely important to entrepreneurs.

Non-fungible tokens assist businesses save money on fraud detection, copyright issues, counterfeit products, and people managing their private and personal data through a wide range of use cases and benefits. In the blockchain world, NFTs play a unique function.

If you have more questions regarding digital transformation and blockchain – feel welcome to contact us.

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