First of all, talking about NFT, NFT is a digital representation of any objects from the real world which may be any character, games items, music, art, videos, or can be anything that is represented digitally, and NFT like cryptocurrencies are sold and bought online and they are also coded in the same software as we have seen many cryptocurrencies are.
The full form of NFT is a Non-Fungible Token. These NFTs have their unique code which becomes their identification and they have their own metadata which helps them to differentiate themselves from the other NFTs. Like cryptocurrencies, NFTs cannot be exchanged or cannot be traded at a similar value, any Non-Fungible Token (NFTs) cannot be used for any commercial transactions as we have seen in the case of cryptocurrencies which can be used for commercial transactions also.
In a Non-Fungible Token that is NFT, all the digital data are basically stored in a blockchain for financial security in the form of a distributed ledger. Like cryptocurrencies, every Non-Fungible Token that is NFT has its owner and these owners have the right to transfer their Non-Fungible Token that is NFT to other person, entities, organizations, or any other.
This can be transferred by selling or trading or through any other means. Basically, the ownership of NFT is preserved and securely stored in the blockchain from where the transfer and trading take place.
NFT VS CRYPTOCURRENCY
The basic difference between a cryptocurrency and an NFT that is a Non-Fungible Token is that cryptocurrencies are fungible and each and every NFT has a unique identity of its own which differs it from the rest of the group. Every Non-Fungible Token that is NFT has a digital file associated with it for all the references that it consists of and these files and references help NFT to create its own market value.
In a simple way, we can say that the digital answer to currency came as Bitcoin, in the same way, the digital answer to different kinds of collectibles is known as NFT. It gave all the digital artists a new platform to show their talent, skills, and creativity. They are having the platform to show their talent as much as they can as there are lots of people available to buy their work. This NFT has a lot of dimensions and a whole new world related to them we can understand them in detail.
Talking of simple examples, we can take the example of crypto panks which is an NFT that enables its users to buy sell, and Store the collectibles up to 10000 in number and they also get the proof of the ownership.
HOW NFT WORKS
In the above paragraph, we understood what is NFT in detail. Now talking about different aspects of it, now we need to understand how NFT works.
We all have heard about the Ethereum cryptocurrencies blockchain. On this blockchain, most of the NFTs reside. Talking about Ethereum blockchain, it is a kind of distributed public ledger that has the property of recording each and every transaction related to NFTs.
There are lots and lots of valuable information stored inside every NFT if we talk in terms of each and individual NFT as a token.
The value of each and every NFT is created by the demand in the market and since they have a demand and price, these NFTs can be bought and sold like any other form of art that is present in the market.
Each and every nft is designed in such a way that every NFT contains a unique set of data which makes it different from any other NFT present in the whole world and this data makes it very much easy to verify and validate the ownership and as a result, this ownership or owner has all the right to transfer the tokens between different people and entities.
We all understand that blockchains are the basic process that enables all the cryptocurrencies to exist and their transaction to take place, and not only the Ethereum blockchain but there are also other blockchains available that help and support the Ethereum blockchain on which they basically depend on.
What NFTs REPRESENT
NFT basically is a representation of any tangible or intangible items available and that particular NFT is created from that particular digital objects that are already present. these objects may be music, shoe, sneakers, it can be video games, can be different virtual avatars in GIFs available, in any form of art, any kind of video, any kind of sports highlights, or any collectibles.
It would be very interesting for people to know that any tweet that people do can also be transformed into an NFT, and here we would like to share a piece of very interesting information that the co-founder of Twitter that is Jack Dorsey has made an NFT from his first ever tweet which was sold for more than 2.9 million dollars.
People from the very old days have the habit of collecting items in the physical form whether be it an art piece, any painting, any showpiece, model or structure, design, or anything that can be collected and stored. Nowadays, digital transformation is taking place in each and every industry. Talking about automobiles, pharmaceuticals, gaming, social media, and many more. So the digital transformation took place in this particular industry also and basically NFT are the digital form of these items that can be collected and stored in the form of a digital file.
The NFTs have the feature in which their creator or artist can include their signature in their particular artwork and it has its metadata which will make them the creator of that particular NFT and as we know that NFT has unique data, which makes it easily distinguishable among all the other, so the owner will have all the rights and authority to transfer the NFTs wherever he wants.
Uses of NFTs
When NFT is created by any person, they are created with the purpose of being sold in the market and earning profits. Earlier the system was that if any artist or any creator wanted to sell his piece of art they need to have a gallery, any auction house, or any place required to display and sell their creation. But now, in this digitally transformed and digitally advanced world, artists don’t need or require any such physical places, and they can directly sell their creations to their consumers as an NFT and earn profits.
Blockchain technology of NFT enables its creators to monetize and earn profit for their production or creation where the artist can have the royalties so that whenever their creation or art is sold next time to any new consumer, they will still receive the percentage profits from that particular sale.
Talking about conventional arts, this facility was missing and the artist only use to receive profit for the first time while selling his art.
Nowadays many celebrities have entered this segment. Legendary celebrities like Amitabh Bachchan, Salman Khan, Lohan, and many more have entered this segment and they are using their unique memories, and unique art pieces, and life-changing moments and making NFTs out of them.
Talking in terms of famous NBA, NFTs which are sold at the highest prices, some of them are-
- LeBron James holo mm XX dunk which was sold for 99999 dollars.
- NFT highlighting LeBron James was sold for more than 2 lakh dollars.
- The top shot in ft from the world-famous NBA is estimated to have generated around 500 million dollars when it was sold of in the last march.
- In the year 2011, a GIF of a cat named neon cat which was having a pop tat body was sold for around 600000 dollars.
- So this way we can understand that art is not the only limited form in which people can make money in NFTs. There are different famous brands like Taco Bell and Charmin who are auctioning their theme NFT to raise money in the name of charity.
- The most significant use of NFT nowadays is in the digital content all the digital content creators are seeing NFT as their way to earn more and more profit and create a powerful economy where these content creators will have all the rights and ownership of these NFTs.
- In the gaming world– Nowadays, gamers love to collect different items while playing games and after reaching a certain level, and winning a particular game. So, there are different games available which are providing rewards in terms of NFT. These gaming channels or online games provide items that people can earn and buy for their character in that particular game. We have seen people spending lakhs and lakhs of rupees for their character in games like pubg, free fire, bgmi, and many other games.
So these NFTs are having a lot of potentials to create a potential market where these gamers will spend money to buy the NFTs.
- In domain names– Remembering any complicated or complex domain names can be difficult sometimes, so we have the solution right now available in the market, you can have your domain name made in a form of NFT. It will become very easy to remember any complicated and complex domain name. There are creators available who will make the interesting, memorable, and valuable domain name in NFT which will make your IP address more memorable and interesting.
How To Buy NFT
After we have seen above what is NFT, and what it is used for,r now we will understand how to buy NFTs.There are a few items needed which are very important to have if we want to have NFT. The first basic thing that we need in order to possess NFT is to have a digital wallet. A digital wallet allows us to store NFTs as well as for cryptocurrencies.
Different NFT owners accept different currencies. There are a few providers which accept different cryptocurrencies that can be Ethereum, so we need to purchase some of those cryptocurrencies. So the first thing we need to do is to buy that particular cryptocurrency and that can be done using any credit card. Cryptocurrencies can be bought using a credit card on various platforms available online like PayPal, Coinbase, Etoro, and many more.
After we have bought them, it will be easy for us to move those cryptocurrencies from the exchange in our personal digital wallet. Different exchanges have their own transaction percentage rates, so these are the things that we need to keep in mind as a buyer when we are moving ahead to buy cryptocurrencies and then NFT.
NFT and The Market Size
So, now we have already set up our digital wallet, and we are already possessing a few cryptocurrencies in that particular digital wallet. So we are now all set to buy NFT. Talking about the NFT market, there is the availability of numerous NFT sites from which we can shop NFT of our own choice. Some of the famous NFT markets or places to buy NFT from are –
- OpenSea.io – On this site, the consumer or the buyer will get a collection of rare digital items and different collectibles from which they can choose accordingly. The buying process is very simple, the user just needs to create an account on this particular website and can start browsing different art collections. There they get a chance to select rare pieces and sort their items after comparing different sales volumes and also they can discover new art collections from new artists.
- Foundation – Here, on this particular site, people can buy as well as sell their art. The only thing that they need is an invitation from their respective fellow creators after which they can put their art for sale.
- Rarible – Rarible is a site similar to OpenSea. It is a market that is open for all creators, artists, and buyers, from where they can sell their respective NFTs here on this site different features like fees community rules can be viewed and then decision making becomes easier.
So, these are some of the famous websites from where people can buy and sell their NFT. Not only this, there are lots and lots of options available right now on the internet from where people can go, do research, and find out NFT of their own choice and then can make the decision to buy or sell. Consumers just need to keep in mind that they do careful research and study before buying any product. There have been many cases where consumers have become victims.
People have sold someone else’s art pieces to the consumers without the permission of the NFT owner, due to which the consumer faces problems and issues. There are a few drawbacks like the verification steps and process for the creators of the NFT who are listed on different websites are not the same and consistent across different platforms available online. On some platforms, the rules are more stringent than on others. We can take the example of open sea and rarible where they do not ask for much verification for listing the NFT for sale. This process sometimes becomes a drawback where people sell someone else’s art in their own name.