Non-Fungible Tokens (NFTs)
Crypto enthusiasts are exploring ways to capture the crypto market. In this crypto space, anyone can invest, trade, create projects and do much more activities through NFTs, cryptocurrencies, and multiverse. The crypto industry provides equal opportunities for investors, developers, traders, creators, gamers, etc.
What is An NFT?
NFTs are tokens that enable users to claim ownership of unique items, including art, collectibles, real estate, etc. NFTs are non-fungible because they have unique properties that cannot be interchangeable with other items. On the other hand, cryptocurrencies, like Bitcoin, are fungible, as they can be exchanged for another bitcoin.
As Ethereum is a green blockchain, Non-fungible tokens don’t have much impact on the environment. Ethereum uses a proof-of-stake mechanism, which lowers the use of electric consumption(~0.0026 TWh/yr) to a large extent compared to Bitcoin, which uses a proof-of-work mechanism that consumes huge computational power.
Non-Fungible Tokens Benefits
Creators used to have restrictions when they publish their work on traditional platforms, as most of the profits are owned by the respective platform through ads.
With the entry of NFTs, creators got a huge advantage of ownership of their work and can sell their digital assets on blockchains like the Ethereum ecosystem by earning royalties every time the asset is being sold.
Creators can sell their work anywhere and anytime on the crypto market and retain ownership rights or can hold their NFTs.
NFTs are a boon for game developers and gamers alike. For instance, in regular games, gamers buy in-game items while playing a game and the items should be utilized within the game and cannot be transferred or retained by the user. The players lose their items, if they are no longer interested in the game or the game is deleted by the developers.
If that in-game item is an NFT, you can own it, which means you have full control of the item. You can sell the items and earn profits on an open marketplace if you don’t want to continue playing. If the item is a special one, then you have hit a jackpot !!
Game developers can create items using protocols and sell them on any decentralized exchange without any trouble. They can earn royalties each time the item is resold.
Types of NFTs
- Digital artwork like GIFs, videos
- Unique fashion sneaker
- Game item
- An essay
- Digital collectible
- Domain name
- Event ticket
- Real-world goods like tokenized invoices, legal documents, signatures
- Real estate
- Degree certificate
- Music royalties
- Digital identity
And much more….
How does an NFT Work?
Non-fungible Tokens cannot be replicated as the ownership of NFTs is managed through the unique ID and metadata. Non-fungible tokens are created by a process called minting (the process of converting a digital file into a digital asset) through smart contracts, which cannot be altered or modified.
To mint an NFT, you need to create a new block on the blockchain, validate the data and record the information. The one who is minting an NFT needs to execute a code stored in smart contracts and the information is added to the blockchain.
After minting an NFT, they are assigned to a unique identifier and are linked to one blockchain address which contains the ownership details.
Marketplaces where you can mint NFTs
- Enjin(via JumpNet)
- BNB Chain (Binance)
- Nifty Gateway
- Async Art
- Proton Mint
With low fees, you can create and mint an NFT easily and efficiently using the above platforms. Some platforms provide free plans while some are priced.
Properties of NFTs
- Each Non-fungible Token is Unique and linked to one Ethereum address.
- They can’t be interchangeable.
- You can track every detail of your NFT easily.
- You can prove your ownership using your private key.
- NFTs are tamper-proof.
- You can earn resale royalties by selling it on the NFT market or peer-to-peer.
- You can earn a royalty every time the NFT is sold.
- You can take a loan using Decentralized Finance (DeFi) with NFTs by keeping it as collateral.
- If you can’t or won’t want to buy an NFT, you can own a part of it like a share through fractionalized ownership.
- You can use it as Tokengating– if you need access to a platform, you need an NFT to unlock it, just like a password. Because of its unique quality, you can’t tamper with the ownership.
How to Buy an NFT
NFTs can be purchased with Ether (ETH) cryptocurrency, using a digital wallet. The list includes art, sports, collectibles, entertainment, auctions, music, etc. You will be charged a small amount of transaction fees as set by the exchanges.
Market places where you can buy NFTs :
- Open Sea
- Nifty Gateway
Some of the highest-sold NFTs
- CryptoPunk #2338– sold for $4.4 Million
- Stay free– sold for $5.27 Million
- Save Thousands of Lives– sold for $5.23 Million
- World Wide Web source code– sold for $5.4 Million
- CryptoPunk #5217– sold for $5.59 Million
- Ocean Front– sold for $6 Million
- Crossroad– sold for $6.66 Million
- Everydays: The First 5000 Days– sold for $69.3 Million
The list of NFT users includes creators, gamers, celebrities, famous personalities, etc. In the future, there will be significant growth in NFT adoption. More user cases will be developed by implementing the latest infrastructure and technological innovations in the crypto industry. Tokenization has a huge potential to be in the crypto market. Be cautious and keep an eye on fake and unverified sellers and marketplaces.