NFT is a topic that has set the internet ablaze in recent months. NFT market size is increasing by the day with investors showing high interest in the emerging industry. According to the data from a sale tracking firm, DappRadar, the NFTs trading was at $100m as of 2020, and just about a year after, it had increased to $22bn. NFT may sound unclear to you or may even sound crazy, I mean why would someone decide to buy digital art so high? can’t they just screenshot it?
Or how else would you explain the craziness behind the decision of someone that bought Jack Dorsey’s first tweet ever for a whopping $2.9 million as NFT?
All of these can force you to ask the question: what is NFT?
In this article, I will be doing justice to that. Not only will you know the meaning of NFT, but also the NFT types that exist and how you can create, buy and sell them and perhaps make yourself some good fortune.
What is the meaning of NFT?
NFT is an acronym that stands for Non-Fungible Token and according to experts, it is a unique identifier on the blockchain which can cryptographically assign ownership to digital assets such as art, music, video clips, etc.
NFTs can be likened to physical collectible items only in the case of NFT, the items are in digital form. For example, instead of having an actual painting from an artist, you get the digital file of the artwork instead. Also, NFTs can only have one ownership at a time which means no two owners can be tied to it.
How does NFT work?
NFTs are created and as well stored on the Ethereum network. An Ethereum functions as a cryptocurrency just like bitcoin but it also has the technological capacity to store additional information. You might be thinking, can’t I just download for free the image or video that someone paid millions for? The truth is that you can download as many digital files as possible, but with NFT, there can only be one ownership. We can liken this to physical artwork.
Take, for example, the Mona Lisa artwork, many people can have a copy of Mona Lisa painting, and you can even pay an artist to paint something very similar but the fact remains that there can only be one original Mona Lisa. This also applies to NFT.
NFT also gives you an exclusive right to events once you own a certain token. An example is the Bored Ape Yacht Club which hosted a private concert for their token holders. To gain access to the concerts, you will either own a mutant or a bored ape NFT.
Bored Ape Yacht Club is regarded as one of the most prestigious NFT collections all over the world due to the notable personalities in the club. Some of the club’s high-profile celebs include Jimmy Fallon, Post Malone, Eminem, Steph Curry, Snoop Dog Etc.
Differences between Cryptocurrency and NFT
Both NFT and Cryptocurrency rely on blockchain technology. While the two have some similarities, they are different. Cryptocurrencies are digital currencies in which payment is verified and maintained through blockchain while NFTs are cryptographic tokens used to represent real-world items like arts, music, etc, and to prove real ownership.
How to buy an NFT
Investors have been looking toward the NFT market because it is quite rewarding. If you want to know how to invest in NFT, you can follow the following guidelines:
1. Purchase Ether
Most NFT marketplaces only accept Ether (ETH) as their means of payment. So if you have a crypto wallet already, all you need to do is purchase and store Ether in it. If you don’t have a crypto wallet, you can easily open one and fund it with ETH.
2. Connect your Metamask wallet to an NFT marketplace
There are lots of NFT markets you can choose from, including, Rarible, Larva, and SuperRare but the best of them all is OpenSea. To connect your wallet to OpenSea, go to OpenSea.io and click on the icon located at the top right corner to select your profile. Follow the given instructions to connect your wallet.
3. Shop for your desired NFT
After you have successfully connected your wallet to the marketplace, it is now time to shop for your desired NFT. Choose the NFT you wish to buy and you must ensure that your ETH balance is sufficient for the fees. So what fee are we talking about here? Most of the NFTs listed on OpenSea use the Ethereum blockchain and the network makes a charge each time there is a transaction, this charge is referred to as a “gas fee”.
The gas fee isn’t fixed, it changes depending on how busy the network is. This implies that even if the NFT is listed as free or it is very cheap, you still need to consider the gas fee, so it is not free in the real sense.
NFT is still a speculative market and there is still a lot that we don’t know yet. Since the NFT ecosystem is fast growing and you might have the urge to act quickly. Ultimately, whether you’re buying, selling, or minting NFTs, ensure that you carry out your due diligence because there are a lot of scammers out there.
Moreover, art collections are not all there is about NFT. The “non-fungability” of NFTs makes it possible to expand its application to real estate assets and business ownership proof. Though this will require a lot of time and research, we have really come a long way since the inception of blockchain.