Are you scratching your head because everyone around you is talking about NFTs? There are three types of people, one who knows what NFTs are, and the second type of people have a vague idea, and some are clueless. If you don’t know anything about NFTs, make sure to read this article until the end. In this article, we will explain what NFTs from the basics are.
NFT means for Non-fungible tokens. Non-fungible means non-interchangeable, where one token is one of a kind and unique from all the others.
NFTs are pieces of digital art. They are listed on different blockchains and hold some value. Non-fungible means that an NFT is not tradeable. Each NFT is different from the other because it is unique. For example, Bitcoin and USD are fungible currencies. If you give some a dollar bill and ask them to exchange it for another dollar bill, you’d have the same value of the currency. However, that is not the case with NFTs. You can’t find an equal and identical replacement of an NFT.
If you trade you’re of the kind NFT, you will have something different. For simplicity, let’s assume that the painting of the Mona Lisa is an NFT. You can’t find something like it; it is unique and one of a kind. If you give someone that painting, you would have something different, such as dollars.
We have got you covered if you want to know the technicality behind NFTs. An NFT is a data unit stored on a digital ledger known as a blockchain. An NFT can be traded or sold. It is usually associated with a specific digital or physical asset. These blockchains also establish the ownership of an NFT, but it has no legal basis for enforcement.
NFTs work like cryptographic tokens on a blockchain. But unlike cryptocurrencies, such as Bitcoin or Ethereum, we can’t interchange NFTs. So we can say that all bitcoins are created equal. However, all NFTs are not created the same. Some NFTs are valuable, and some are not. NFTs are created on blockchain string records of a cryptographic hash. It is a set of characters of identifying data blocks. This cryptographic transaction process ensures that each digital file is authentic and has a digital signature. The signature can be later used to track the ownership of the NFT.
Now that we have cleared what an NFT is let’s see how an NFT works. As we mentioned earlier, an NFT exists on a blockchain, and it is distributed through a public ledger that keeps a record of its transactions. Most people are familiar with blockchain as it is the underlying process that has made cryptocurrencies possible. Similarly, NFTs are most commonly held on Ethereum blockchain; other supported blockchains are Solana and Binance Smart Chain.
An NFT is minted (created) from any digital object representing tangible and intangible items. It can include items such as;
There is essentially no limit to the term “art” regarding NFTs; people can even make NFTs out of tweets. The co-founder of Twitter sold his first tweet on Twitter as an NFT for 2.9 million USD. So, we can say that NFTs are just like physical collectible items; they are just in digital form. Hence, it is like buying a painting in a digital footprint.
Each NFT has exclusive ownership as well. Each NFT can only have one owner at a time. More than two people can’t share the ownership of the same NFT item. This “ownership” data is stored in the digital signature on the blockchain, exclusive to each NFT. This process makes verifying the ownership and transference of tokens between different owners easier. The owner of the NFT can also store information inside the digital signature of the NFT. This signature works like a painter’s signature at the bottom of their artwork, making it recognizable.
Blockchain technology has brought artists a unique and awesome opportunity to monetize their artwork. This means artists will no longer rely on auctions and galleries to sell their artwork. Instead, any artist can sell their work directly to the buyers as an NFT. This process is much more secure and ensures higher profit rates. Moreover, artists can also program royalties to their NFTs. Royalties ensure that the creator earns a small profit on every secondary trade of their NFT. This is a very attractive and important feature for artists, as we have seen many artists stripped away from their rights before. We see artists like Snoop Dogg and Lindsay Lohan releasing unique memories, artwork, and moments and securing them as NFTs.
Another positive way to use NFTs is through charities. Some major brands like Charmin and Taco Bell have already auctioned off their themed NFT artworks to raise funds for charity.
There is no limit to the people who can get into NFTs. Anyone can create, trade, and sell NFTs. So nothing is stopping you from making money through NFTs.
If you are a digital artist, you can create NFTs yourself. Otherwise, you can find digital creators on freelancing platforms such as Fiverr.
The first step to buying an NFT is creating a digital wallet; this wallet will allow you to store NFTs and other cryptocurrencies. You will also have to purchase some cryptocurrency such as Ether; this depends on your NFT provider’s cryptocurrencies as payment. People can also buy cryptocurrency using credit cards on Coinbase, Kraken, eToro, and PayPal. After acquiring these components, you will move your NFTs from the exchange to your wallet.
NFTs are pieces of digital crypto tokens based on a piece of art. NFTs are becoming popular day by day. Our article explains NFTs in depth. If you are a beginner, then make sure to read our other stuff related to NFTs and cryptocurrencies.
About Author
