WHAT IS AN NFT? WHAT DOES NFT STAND FOR?
Non-fungible token.
An NFT is a unit of data stored on a digital ledger, called a blockchain, which can be sold and traded. The NFT can be associated with a particular digital or physical asset (such as a file or a physical object) and a license to use the asset for a specified purpose. An NFT (and, if applicable, the associated license to use, copy or display the underlying asset) can be traded and sold on digital markets.The extralegal nature of NFT trading usually results in an informal exchange of ownership over the asset that has no legal basis for enforcement, often conferring little more than use as a status symbol.
NFTs function like cryptographic tokens, but, unlike cryptocurrencies such as Bitcoin or Ethereum, NFTs are not mutually interchangeable, hence not fungible. While all bitcoins are equal, each NFT may represent a different underlying asset and thus may have a different value. NFTs are created when blockchains string records of cryptographic hash, a set of characters identifying a set of data, onto previous records therefore creating a chain of identifiable data blocks.This cryptographic transaction process ensures the authentication of each digital file by providing a digital signature that is used to track NFT ownership. However, data links that point to details such as where the art is stored can be affected by link rot.
How do NFTs work?
At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs.
What’s worth picking up at the NFT supermarket?
NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.
What are NFTs used for?
According to the Amazon AWS website, NFTs can be created to represent virtually any asset. However, the website Ethereum.org states that tokenization of physical items is not yet as developed as their digital counterparts.
“An NFT is minted from digital objects as a representation of digital or non-digital assets,” read Ethereum.org.
“The most common NFT assets are digital art, digital collectible items, pieces of content like video or audio, and event tickets,” read a portion of the Amazon AWS website.
How to buy NFTs
Essentially, any digital image can be purchased as an NFT. But there are a few things to consider when buying one, especially if you’re a newbie. You’ll need to decide what marketplace to buy from, what type of digital wallet is required to store it and what kind of cryptocurrency you’ll need to complete the sale.
OpenSea’s marketplace
Some of the most common NFT marketplaces include OpenSea, Mintable, Nifty Gateway and Rarible. There are also niche marketplaces for more specific types of NFTs, too, such as NBA Top Shot for basketball video highlights or Valuables for auctioning tweets such as Dorsey’s currently up for bid.
But be wary of fees. Some marketplaces charge a “gas” fee, which is the energy required to complete the transaction on the blockchain. Other fees can include the costs for converting dollars into ethereum (the currency most commonly used to buy NFTs) and closing expenses.
If you’re curious and want to know more about what it’s like to purchase an NFT, we went ahead and bought one.
How to sell NFTs?
NFTs are also sold on marketplaces and the process can vary from platform to platform. You’ll essentially upload your content to a marketplace then follow the instructions to turn it into an NFT. You’ll be able to include specifics such as a description of the work and suggested pricing. Most NFTs are purchased using ethereum but can also be bought with other ERC-20 tokens such as WAX and Flow.
How to make an NFT?
Anyone can create an NFT. All that’s needed is a digital wallet, a small purchase of ethereum and a connection to an NFT marketplace where you’ll be able to upload and turn the content into an NFT or crypto art. Simple, right?