NFT's What are they exactly ?

27.08.21 04:25 AM Comment(s) By Dev

Unless you’ve been hiding under a rock, chances are you would have come across the three-letter acronym of the moment: NFTs. You might have even found yourself frantically googling phrases such as ‘what does NFT mean’ or ‘NFT meaning’. But what does NFT mean exactly, and why have they become so popular? Read on – we’re here to explain what it all means!

What is an NFT?

What does NFT mean? For the uninitiated, NFTs, or non-fungible tokens, are unique tokens that are not interchangeable with other tokens existing in the same class. These non-fungible tokens are meant to represent certain digital assets, including art and in-game items, amongst plenty of other collectibles.

What is fungible vs. non-fungible?

The difference between fungible tokens and non-fungible tokens can best be explained through examples. For instance, digital assets such as Bitcoin or Ethereum are examples of fungible assets. The word fungible means that they are interchangeable for a particular purpose. For instance, if someone were to borrow one ETH from you, they would be able to return the same ETH back to you. There would be no practical difference.

On the other hand, if someone borrowed specific NFTs from you, they would have to return those exact same NFTs to you. This is because NFTs all have individual characteristics that make them unique from one another. 

How do NFTs work?

NFTs aren’t just pieces of digital art you see on the screen. The driving technology behind NFTs and what makes them special is that they are underscored by unique units of data on smart contract-enabled blockchains, such as Ethereum and NEO, amongst others.

NFTs are crafted based on various token standards, such as the ERC-721 standard. What all this means is just that attributes such as file links and other forms of metadata can be encoded in the token, providing information on its source and past transactions, amongst other data. This is to ensure that all NFTs are unique.

Why are they so popular?

There are several reasons why NFTs have become so popular in recent months. This is in spite of the fact that NFTs have actually existed long since 2015. If you’ve heard about Cryptokitties at some point, they too are NFTs that gained attention in 2017. That said, the current attention that the NFT sphere is currently experiencing is certainly unprecedented. The sudden spike in popularity can be attributed to several factors. 

A slew of celebrities and renowned personalities have recently begun to take note of NFTs. From Mark Cuban to Paris Hilton, NFTs have been referenced and discussed on by numerous such individuals. Some of them have even gone so far as to create their own NFTs. The result of all this? What was once thought to be an obscure and niche corner of the internet has blown up as a result of this popular attention.

Beyond this, the sheer amount of money some of these NFTs have gone for has equally helped attract attention to these assets. The recent sale of Mike Winkelmann’s “The First 5000 Days” for a whopping 69 million has no doubt raised eyebrows everywhere. The fact that what the average person would perceive to be a JPEG was sold for that much money would pique the interest of anyone. The opportunity to potentially make even a fraction of that sum is an incredibly attractive proposition.

How to buy NFTs?

Buying NFTs is a lot easier than you think. While diving into the crypto-sphere may seem daunting, all it really takes is some time and a few clicks. First, you’ll need to acquire an NFT-compatible cryptocurrency wallet. Some good choices include Metamask or Rainbow. Then, purchase some Ethereum from a centralized exchange – you’ll be using this to buy your NFTs. Then, navigate to an NFT marketplace such as OpenSea or Rarible to find an NFT you’d like to purchase. 

How to sell NFTs?

Selling NFTs can be just as simple. If you’re an artist or creator hoping to tokenize your art into NFTs for sale, you’ll have to do so first on platforms such as Rarible or Mintable. After that, you can then list your NFTs for sale on the aforementioned online marketplaces. If that isn’t the case and you’re simply just a trader or investor looking to flip your collectibles, you can proceed straight to listing your NFTs without minting new ones.

Are NFTs a good investment?

As with any investment, it’s always important to do your own research. For now, though, there are several factors on why you should be bullish on NFTs. NFTs have huge growth potential, especially considering their incredibly versatile use cases. Beyond just art, NFTs have also been incorporated into blockchain games, digital documentation, and licenses, amongst plenty of other use cases. 

Conclusion

Needless to say, as the NFT space continues to grow, it will be an incredibly exciting one to watch. This is especially considering the potential for NFTs to serve as the bridge between the digital and cryptocurrency spheres and mainstream consumers. As the digital revolution continues to sweep the world, the future looks optimistic for NFTs.

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