What is NFT
NFT stands for Non-Fungible Token. These tokens are created and traded in the digital world only. NFTs represent the proof of ownership of the digital asset. If you are an owner of some NFT, you most likely will not have a physical item, but instead, you will have the proof of ownership of the asset stored on a blockchain, the distributed ledger system.
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The term Non-Fungible - means that the item has unique properties that are not interchangeable (One of a Kind). In other words, if you give a non-fungible asset to someone and want it back, that person must return you the exact same asset—for example, paintings, houses, diamonds, land, and domains.
The term Fungible - the item can be replaced by another same-of-a-kind item. In other words, fungible items will have identical or the same properties.
For example money or commodities.
Fungible
Non-Fungible
How NFTs Work
Once you create or buy an NFT, you become the only legal owner of the specific digital asset. You will have all the rights to distribute, resell or license that digital asset. Once the token is created, it can not be duplicated or deleted.
Where NFTs are Stored
The most common storage for NFTs is the Etherium blockchain; however, keep in mind that any blockchain may implement its own NFT version. For example, Tron, PolkaDot, Tezos, Cosmos, and Wax.
How the Value of NFT is Determined
This is a very tricky question because, unlike other assets, the value of NFTs drives by few factors, such as the popularity of the creator, the artwork itself, and demand. It has a speculative motive based on how much someone is willing to pay for a specific digital asset. The simplest way is to think of the auction bidding.
Benefits of NFTs
Non-Fungible tokens can benefit creators, artists, musicians, gaming companies, and others who produce digital products.
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NFTs are unique - they cannot be duplicated, which reduces the chance of fraud.
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NFTs can be used to represent real-life assets, such as artwork or land.
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NFTs allow selling artwork without an intermediary’s intervention. In other words, the creator may sell his drawings directly to the buyer instead of selling them to some company that later re-sell his work.
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Digital artists may gain royalties for their artwork. Every time their art piece will be bought by a new buyer, they will receive a percentage for every transaction.
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Non-Fungible tokens are easy to verify. The system allows to track transactions back to the creator and identify the authenticity of this asset.
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Efficient market
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It is essential to mention that NFT is relatively a new tool that has tons of potential. With more people educating themselves about Non-Fungible Tokens, this can become a real deal in the short future and open up an ocean of new opportunities.
The Ownership of NFTs
When you buy a Non-Fungible Token, you become a legal owner of the digital asset, and you can transfer it to your digital wallet. The token proves that you have the original asset.
Types of NFTs
Collectibles
Video Games & Domains
Sports
Land & Licenses
Music
Artwork
NFT Marketplaces
There are several markets where Non-Fungible Tokens are being traded.
OpenSea
How to Buy NFTs?
To purchase Non-Fungible Tokens, you must have a digital wallet that supports Ether coins (ETH). If you already have your digital wallet set, the next step is to buy ethereum crypto coins. Lastly, you will need to connect your digital wallet to any marketplace that works on the ethereum blockchain. Click here for a detailed guide.
How to Sell NFTs?
Most of the NFT Marketplaces allow you to create a collection and upload your file. After that, you will see a pricing page where you will be able to choose between running an auction or sell your token at a fixed price. Some of the marketplaces will charge you a small listing fee to set your product on sale. In addition, you will be required to pay one-time gas fees for account authorization.
How to Create NFTs
The process of creating Non-Fungible Tokens is called Minting.
Minting adds unique information to your file, which makes it distinctive.
Step 1: Choose the blockchain. Currently, the most popular blockchain for NFTs is the Ethereum blockchain.
Step 2: Choose the marketplace that operates under the blockchain you chose. ( For example, if you want to create your NFT on Ethereum blockchain, you may use: Opensea.io or rarible.com )
Step 3: Connect your digital wallet to the marketplace that you chose.
(For example, if you decided to use Opensea.io, you will need to connect Ethereum based wallet to their marketplace)
Step 4: These days, most marketplaces have a CREATE button. You will be asked to upload the file and enter the description. Also, some marketplaces allow you to enter unique traits and stats into your NFTs, which we discuss in detail in another blog.
Step 5: After you uploaded your file, it will start to mint. Please note that some marketplaces allow you to create your NFTs for free, while others will charge a fee.
