Nonfungible tokens(NFT) are the talk of the town now, as the crypto world is evolving massively.
We have noticed that many people only know the word ‘NFT’, but know little or nothing about it.
It is sacrosanct that you understand technological trends to keep you on the digital track.
In this article, we would be breaking down the meaning and uses of NFTs in layman’s terms, read carefully.
What is NFT?
NFT mean nonfungible token, but this will make NFT more confusing, let’s take it slowly.
The word Non-Fungible is something that is unique and cannot be replaced with any other thing.
This tells you that NFTs are original tokens that cannot be replaced by anything else.
Your fiat currencies are fungible, and cryptocurrencies are fungible, as one BTC is the same as 1BTC when you exchange them.
NFT explained as it relates to Crypto
Blockchain gave meaning and value to digital art by introducing originality and authenticity to art. With this, anything you have can be an NFT, you can just draw a fish on paper and here you go, you can turn it into an NFT.
So, Non-fungible tokens are pieces of digital content (images, sounds, videos, podcasts) that are unique and then linked to the blockchain. it’s the blockchain linking that gives meaning and more value to digital art. So, if you have graphics work, maybe a cute cartoon is drawn. To add meaning to it, you can link it to a blockchain to make it secure and original. That NFT can be tradable in the crypto ecosystem.
In case you don’t understand what blockchain is, blockchain is a distributed ledger that records and verifies the transactions of cryptocurrencies.
What is blockchain?
Blockchain is a secured ledger, where crypto transactions are verified and recorded.
For example, Bitcoin has a blockchain in which all the codes making it function was built. The advantage of blockchain is that after building or coding it, it is impossible to change, hack, or cheat the system.
As said earlier, Bitcoin is fungible because it can be replaced or exchanged with another identical one of it. But NFTs are not. You can’t replace an NFT with another one. Your NFT is your own, No two NFTs are the same.
The scarcity and value of NFTs are what makes the price so high, unlike cryptocurrencies. So don’t be surprised if one tiny ugly piece of art is sold for 12ETH, yeah it’s unique you cant clone it.
NFTs are not limited to pictures or images, they can also take the form of GIFs, Collectibles, Music, Videos, and even real-world items.
The crypto space is going mainstream and it’s because of NFTs, even the outburst of the metaverse was a picture of the painting nature of nonfungible tokens.
NFTs and the Ethereum blockchain
The Ethereum blockchain is the most prominent blockchain for linking NFTs.
Since an NFT can only have one owner at a time, ownership is managed through the uniqueID and metadata on the blockchain making it difficult for replicating or replacements.
What Minting Means
Minting is a process that assigns ownership and transfer of management to the NFT and it is done through smart contracts. Creating or minting an NFT requires code executions stored in smart contracts conforming to different standards and finally linked to the blockchain.
From high-standard research, NFTs minting involves
- The creation of a new block
- Validation of NFT information
- Transfer of information to Blockchain
How can I identify my own NFT
Remember we said that your NFT is unique and it belongs to you alone, there is no such thing as two same NFTs.
That’s because there are special properties in different NFTs that make them identifiable and unique.
For example, if it was linked to an Ethereum Blockchain, then it must have a unique identifier to its own Eth address.
So the crypto industry made it possible for users to create their NFTs and oversee it. You are now the one to decide the scarcity of your NFT, wow.
How Can I create an NFT?
Am sure you have been expecting to see this, don’t be in a hurry, we are moving together.
Creating and buying NFTs will be discussed in detail in our next article, but this is just a summary of what it takes.
- You will have to create a digital wallet
- Get a sketch of the digital content you want to turn into an NFT
- Go to the NFT marketplace where you will upload, edit and turn the content into an NFT.
- Depending on the blockchain you want to link your NFT to, you have to get a small amount of the asset, if it’s the Ethereum blockchain, get a small amount of Eth.
How to purchase an NFT
Buying an NFT is very simple but before buying, it’s necessary to note some things.
- Which is the right marketplace to buy from,
- How can I store it when bought
- What wallet or digital asset is needed
- what Cryptocurrency is needed for sales completion?
The following are NFTs marketplaces for exchanges.
OpenSea, Mintable, Nifty Gateway, and Rarible. We also have more marketplaces to buy NFTs but these are the major ones used.
Linking choices of NFT
As discussed earlier there are so many blockchains available for linking NFTs, but Ethereum Blockchain has been prevalent.
Although the disadvantage results from high gas fees during buying, selling and minting.
As a result of this, some people switched to alternatives; The likes of Solana blockchain, ADA, and so on.
Buying or Creating which one is more lucrative?
Creating NFTs might be easier for a few people, but buying is easier for many people.
How do you get ideas to create? How are you sure your art will be liked and bought from you? These are the great concerns of people who are to create NFTs.
But already created NFT are many so, it’s advisable to buy at the minting stage because the price at the minting stage is more like the price of cryptocurrencies during the presale.
In summary, buying and creating are both lucrative but buying will be easier and faster while creating will be slower but could fetch you more money since you are the owner and the overseer.
Conclusion
Cryptocurrency is massively dominating the world, the movement is for everyone, if you can’t trade hold, if you can’t hold, stake your coins in farms. If you can’t do any of those then invest in NFTs.
You have no excuse to remain in the dark because being scared of the day won’t make the night last forever.