The term NFT, or non-fungible token, has frequently appeared in the news, usually followed by an exorbitant amount, which accompanies the sale of one-of-a-kind digital items.
Collectable crypto-projects or crypto digital artworks, also known as NFTs, follow the course of cryptocurrencies in recent months and see their value increase day by day.
We are talking about unique collectables that one would not think cost several millions of dollars.
Yet, a video clip with free images made by the digital artist Beeple (Michael Winkelman) was auctioned for $6.6 mln; its value was initially estimated at $67,000.
At the same time, one of the thousands of CryptoPunks digital avatars was sold for $2 mln, while a crypto-rendering of the ‘Nyan Cat’ meme from the distant 2011 earned $590,000 in an online auction, according to a CNBC report.
NFTs are digital “assets” that consist of a wide range of tangible or intangible objects and/or works of art.
They have value both as alternative forms of cryptocurrency but also as art forms or cultural products.
As art is often regarded as an investment, and NFTs have acquired similar value.
These non-marketable brands could include collectable sports cards or digital property, or even digital sneakers.
The list can be endless, as to create an NFT, the imagination of its creator or any of its “objects” is enough.
NFTs are a special form of cryptocurrency, a digital token that may look like Bitcoin or Ethereum, two of the most well-known and successful cryptocurrencies, but unlike them, each of the NFTs is unique.
If you have ever heard of blockchain, you will know the importance of having every block in the chain containing exactly the same information.
Power of blockchain
Therein lies the “power” of blockchain against hacking, that the thousands of series of 100% identical coins all contain the same information so that any forgery can be dealt with immediately.
Unlike the traditional blockchain, an NFT is 100% unique and therefore cannot be exchanged. Hence the “non-fungible” part of the name.
Investing in digital assets like these, as opposed to a real, tangible collectable, is the information that accompanies an NFT and makes it completely different from any other NFT, which helps a lot in verifying its creator and reducing the possibility of fraud.
Unlike traditional cryptocurrencies, NFTs do not allow direct exchanges and transactions.
An easy example to understand their nature is concert tickets.
Each ticket has specific information on it, such as the name of the creator or the company, the name of the owner or the buyer, the date of the concert, and where it will take place.
In this way, the production company ensures that the respective ticket cannot be used again for any other concert or commercial purpose.
In the same way, an NFT can change hands only through auctions as a collector’s item.
But what makes an NFT more distinctive than a classic crypto coin?
An NFT file stores more information, which upgrades it beyond the definition of a simple currency and allows it to briefly get whatever character its creator wants to be based on the content it chooses.
There are many NFTs, but the most common formats are either digital artwork or a music file.
Similarly, just as a work of art or a piece of music can be digitised, so it is with any other object of value: once it can be digitised, it can be NFT.
Think of them as collectables, only instead of an antique knob or a painting on canvas, in its place, the collector will have a JPG file, for example.
Just like in works of art, their value is largely determined by the market and the demand.
Of course, like with famous works of art, NFTs can be reproduced in duplicate, part of the blockchain chain, but they have a significantly lower value.
In addition, NFTs can be purchased from different platforms, depending on the format or object desired by the buyer.
To do so, you will need an “e-Wallet” (which is usually provided by the platforms with your registration) and plenty of cryptocurrencies to fill it, as NFTs can develop high value.
If you want to sell an NFT like any other artwork you have created, Kapwing’s image and video editing company have a complete guide.
It is important to know that you get a small percentage of all future sales of your NFTs.
Thanks to the growing demand for many types of NFTs, now their availability is advertised everywhere and is the subject of anticipation and impatience from fans.
It creates a buying frenzy, which makes acquiring them more difficult.
By Katerina Michael, Content Writer at eCREDO