NFT stands for Non-fungible tokens, fungible being the keyword here. Cambridge Dictionary defines fungible as something that is easy to exchange or trade for something else of the same type and value. In simpler words, fungible means anything that is replaceable. Therefore, Non-fungible means something that cannot be interchanged. It is unique.
Just like cryptocurrencies, people can buy or sell NFTs on specialised platforms such as Mintable, OpenSea, Nifty Gateway and Rarible. The data of any transaction related to the token is recorded on the blockchain
But what exactly is NFT?
NFT stands for a Non-Fungible Token. NFTs are tokens that are used to represent ownership of unique items. They let us tokenize things like art, collectibles, and even real estate. They can only have one official owner at a time and they’re secured by the Ethereum blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence.
NFT means that hidden in those quirky artworks, there’s a unique and non-interchangeable unit of data stored on a digital ledger using blockchain technology to establish proof of ownership. Essentially the same, or similar technology used for cryptocurrencies like bitcoin and ether is used to guarantee the uniqueness of each NFT and to prove who owns it.
Unlike a unit of bitcoin, however, each NFT is completely unique, so it can’t be exchanged like-for-like. The file stores extra information that elevates it above pure currency and brings it into the realm of, well, anything, really. As a result, NFTs have become collectable digital assets that hold value, just like how physical art holds value.
What does an NFT consist of and how can you buy these tokens?
People can buy NFTs with cryptocurrencies, dollars and fiat currencies. Just like cryptocurrencies, people can buy or sell NFTs on specialized platforms such as Mintable, OpenSea, Nifty Gateway and Rarible. The data of any transaction related to the token is recorded on the blockchain.
NFTs are not restricted to digital art. They can exist in different forms such as music, videos, images and text, etc. Users can buy and sell even tweets as NFTs, if they are unique.
NFTs are quite popular among investors because of their rising prices. They can hold it and sell after witnessing a price hike. Some buyers sell NFTs within a day, some hold it for few days to gain profit. The tokens can solve artists’ problems related to monetization of artwork. With NFT, artists can receive a royalty every time the token is sold.
Crypto can be risky – are NFTs the same?
Yes. As in the crypto world, if you’re not careful with managing your NFTs you could find yourself empty-handed. If you’re interested in getting involved in the NFT world, it’s recommended you become familiar first with the ins and outs of buying cryptocurrency, as you’ll likely need to purchase your chosen artwork using Ethereum, Solana or another popular crypto.
Once you’ve got your hands on some crypto coins, you’ll need to set up an account with Metamask, a browser extension and mobile app that allows you to interact with the Ethereum blockchain. You’ll then need to send the ether you’ve purchased to your Metamask wallet, making sure you have enough to buy whatever NFT you’ve got your eye on.
NFTs: The future ahead
Unlike bitcoin and other cryptocurrencies, each token of NFT nature is absolutely unique, making it a preferred choice of digital art certification. Since the NFTs provide unique ownership of digital assets like art, music, among other things, reports have claimed that the NFT train is going full steam ahead.
Stay tuned with Realxposure to learn more about NFT’s.