Non Fungible Tokens
Almost everyone in Web3 is talking about NFTs. With the current crypto market experiencing a bloodbath, many crypto users have resorted to NFTs. But the big question is, Are NFTs the next big thing in Crypto? If you have been confused about what Non Fungible Tokens are then you are in the right place because today I shall take you by hand and explain this topic step by step in detail to you dear reader and you will then make an informed decision.
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What are Non Fungible Tokens? For a start, Non Fungible Tokens (NFTs) are financial security which is used to store data in a block chain. NFTs digitally represent any assets like digital artwork, music, images and also real possessions for example paintings and real estate. NFTs represent certificates of ownership of Virtual assets. Each NFT acts like a digital signature that makes it impossible for them to be equal or exchanged for one another.
Non Fungible means that something is unique and not replaceable by something else.
How do Non Fungible Tokens (NFTs) operate/work? Non Fungible Tokens are tokens with valuable information stored in them. NFTs have unique data which makes it easy to verify and validate their ownership and also, the transfer of tokens between owners that is the buyers and sellers. NFTs are bought and sold like any physical asset.
When you buy a Non Fungible Token (NFT), you gain ownership of the content in that token but it can still be viewed online. When your NFT gains popularity, its value increases and the price shoots up. When you eventually decide to sell the NFT which value has increased and consequently it's priced highly, the original owner 'if you aren't the one' gets 10% from the sale and you keep the rest of the revenue after the platform used has deducted a small fee for the transactions. Alot of revenue can be realised from buying and selling popular digital assets over time.
Are Non Fungible Tokens worth the fuss about them? We have so far looked at what NFTs are and how they work. And now we want to see if they really deserve the huge attention and adoption they have been receiving recently and if they are worthwhile. Some experts believe that NFTs are just a bubble that will crash anytime soon while others think otherwise. Other experts believe that NFTs are here to stay and they will change investing forever.
Merits Non Fungible Tokens create digital scarcity. When you cut off supply of a give asset, hypothetically it should rise in value if it has demand for it because it becomes scarce. NFTs contain built in authentication which serves as proof of ownership of a particular NFT. Buyers seem to value the digital ownership rights more than the item itself. NFTs are designed to have one recognised and verified owner at a time and the use blockchain technology to verify and validate ownership. Artists and creators can store specific information in an NFTs metadata.
Demerits NFTs are risky and their future is uncertain and there isn't a lot of history about them to judge their performance. The value of a Non Fungible Token is based on what someone is willing to purchase it. Therefore this means that an NFTs demand will drive the price up or down which is different from the fundamental and economic factors that drive price.
How do you buy Non Fungible Tokens (NFTs)? Now that you know what NFTs are, how they operate and their merits and demerits, you may want to own an NFT(s). If you wish to venture into creating, selling and buying NFTs then this is for you. There are some essential items you will need to have before you can be part of the NFT industry.
First and foremost, you will need a digital wallet that allows you to store your NFTs. Like Trust Wallet, MetaMask and many more. Secondly, you will head over to NFT markets like OpenSea and identify the NFT you want to buy.It can be a piece of Art, Music Video, e.t.c. And then you will have to purchase some cryptocurrency coins 'if you don't have' which will depend on what the seller accepts as payment. Most sellers accept Ether (Eth) and Solana (Sol) among others. You can purchase crypto from exchanges like Coinbase, Kraken, Binance, Hotbit, e.t.c. After acquiring the desired cryptocurrency, you can the move the coins from the exchange to the wallet you will use for the purchase. Note that most exchanges charge a transaction fee to move your coins from the exchange to your Wallet. Once the funds are in your wallet, head over to the market place and purchase your desired NFT which you can also store in your preferred wallet.
Non Fungible Tokens (NFTs) market places. We have a number of NFTs market places but currently the largest and most used are OpenSea, Foundation and Rarrible.
OpenSea. Here you will only need to create an account on the official website and browse NFT collections from many artists and creators. Foundation. On this platform artists need to recieve an invitation or send an invitation to fellow creators to post their Art. This Community boasts of high caliber artwork because of its exclusivity. Rarrible. Rarrible allows artists and creators to issue and sell NFTs. It enables holders to consider features like fees and Community regulations
Note: NFTs have existed since 2014 but they have just received popularity and massive adoption.
Also, the only similarity that Non Fungible Tokens have with other cryptocurrencies is that they are created using the same programming languages.
Conclusion With that said, NFTs are still new and many people are jumping on the train but is important you make more research about NFTs. I hope this article answered most of the questions you had about Non Fungible Tokens.
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Till I come your way again
Ivan