What is an NFT? A complete guide of this new digital trend
Any blockchain news going viral means a bunch of people getting confused over and over again. NFT is the latest trending news in the blockchain world and it is just as confusing as Crypto was in the beginning. Let’s understand NFT and everything related to it.
What is NFT?
NFT stands for non-fungible token. The meaning of non-fungible is that a particular thing is unique, and there is no replacement. An example from the blockchain world would be a Bitcoin which is fungible, and you can easily exchange one for another one. However, a one-of-a-kind trading card is non-fungible because there is only one. So if you trade it for another card, it won’t be the same and instead something completely different from the previous one.
How do NFTs work?
The ‘tokenization’ process develops NFTs. In simpler words, you pick up something which is not a token and convert it into a token. Many people believe that almost everything will be a token in the future. If we are talking about NFTs, digital products like pictures, music, and videos are used. These digital assets are ‘minted’ as a token stored on blockchain technology. As we mentioned earlier, each token has to be unique and different from others, and then it can be sold, traded, or made use of in other ways.
If we are talking about a higher level, most of the NFTs belong to the Ethereum blockchain. Ethereum is part of the cryptocurrency, just like Bitcoin and Dogecoin. The difference is that its blockchain supports NFT, which works by storing additional information differentiating them from the regular Ethereum coin. However, you must know that other types of blockchain can develop their personal versions of NFTs; some like Solana and Polygon have already jumped into the NFT world. With the prices of Ethereum going higher with demand, people are looking for alternatives, and so it can be a good choice.
What’s really worth it at the NFT market?
Anything can be made into an NFT. It just needs to be unique. It could be drawings, music, doodles, images, videos, GIFs, virtual reality places, objects in a video game, etc. However, currently, the hype is mostly around selling digital art of all types.
What are the technicalities of NFT?
We have already discussed all the basic details of NFTs, but there is a lot more technicality to it. For example, how is the image converted into a token? Also, what exactly does one own when they buy an NFT?
Let us explain to you that non-fungible tokens are several units of data stored on a blockchain. So, when you purchase an NFT, you are basically buying the respective units and not the image/video itself.
It means that buying the NFT would not make you own the copyrights, and you cannot use the said digital asset as per your wish. However, the creator can replicate it if they want. To explain in easier words, you will own a particular investment on a blockchain, but it does not exempt you from its copyright regulations.
An example could be buying the NFT of a brand’s logo, but you cannot sell your products under that logo. The brand will continue to have its copyright and can use the logo however they like.
What can we do with NFTs?
Once you have understood the mechanism of NFTs, here are some ways that you can make use of it.
- Make digital art and then earn through it by selling it online.
- Develop a video game that includes NFTs as in-game assets.
- Represent real-life objects such as cars, houses, malls, etc.
- Saving sensitive data on the blockchain to protect it from getting tampered with or copied.
There are several ways the NFTs can be used for the greater good. Currently, they are mainly being used in the digital art world and providing a new approach to the artistic movement across the globe. As a result, many new ways of displaying digital art have opened, and digital art creators are finally getting the rewards of their hard work. Moreover, there is a new connection path between digital art creators and collectors.
According to Snoop Dogg’s recent prediction, NFTs will eventually replace all ticketing. It is expected considering that it has already started in the music industry. However, using NFTs is beneficial as compared to the traditional tickets, and the reason is:
- Lower costs
- Avoid fake tickets
- No more Ticketmaster monopoly
- Perpetual revenue
- Better revenue opportunities
It is pretty evident that the future of ticketing is NFTs. However, to make it possible, the blockchain will need to have more options other than Ethereum. Otherwise, the load will not be possible to handle. Fortunately, other coins are also working towards implementing their own NFTs.
Where to buy an NFT?
The leading marketplace for NFTs currently is OpenSea. More than 97% of the NFT transactions are presently being done over there. It provides a user-friendly interface, advanced filtering, and first-mover advantage. Some other names gaining attraction are Rare Bits and DappRadar but, they are just beginning to get in the game, and OpenSea is still the real deal.
Even though most NFTs are on the Ethereum blockchain, OpenSea provides the option of cross-chain compatibility, which shows a rise in the Polygon NFTs. Furthermore, these NFTs are comparatively cheaper and have smoother transactions, making them desirable for newcomers.
NFT is the latest trending news in the blockchain world, and it sure is confusing. However, it is essential to stay up-to-date and follow up on what’s happening worldwide. Therefore, we have tried to explain NFTs in the most simple words easily understandable for a common person so that no one has to compromise on general knowledge regarding the world.