What is NFT?

From social media platforms to late night TV, non-fungible tokens (NFTs) have taken the whole world by storm. If you still don’t know what are NFTs, you might be too afraid to ask by now.

But that’s where some quick reading can help you answer all your questions and learn what is NFT all about. This way, you may not only participate in any conversation regarding NFTs, but also explain to your friends and family how to buy an NFT.

To help you through this learning curve, here’s a quick explainer on the world of NFTs and what they bring to the table.

What is NFT?

An NFT is a digital token that represents the existence and ownership of a unique asset that exists off the blockchain. Unlike cryptocurrency such as Bitcoin that is interchangeable with a token of the same value, an NFT is one of a kind and cannot be replaced with an identical token. That is where it gets the label of being “non-fungible” or non-replaceable.

The assets that can easily be represented through an NFT may include but are not limited to digital artwork, social media posts, and video clips. Other real-world assets such as traditional paintings and real estate can also be represented on the blockchain. But the process to emulate the existence of the latter group is a bit tricker.

Due to this reason, when you are looking to learn more about NFTs, you may see a plethora of informational posts and latest news regarding digital collectibles and little to no information regarding any real world asset classes. But since the NFT space is still developing, you may see more tangible assets being included within the space in the future.

How Does an NFT Work?

An NFT works by creating a digital token on a blockchain network such as Ethereum. This token is unique in its digital signature and cannot have any replicas. It becomes associated with a specific property by having the asset’s details, such as an image’s URL, embedded into the NFT’s meta data. Apart from this unique design, an NFT works like any other cryptocurrency in terms of storage, which is handled through cryptocurrency wallets.

Anyone who holds an NFT in their digital wallet claims ownership to the specific asset that is associated with that particular token. But when you look into what is NFT and how to buy an NFT, you may immediately learn that holding an NFT for digital artwork or video clips does not actually give you the media file on the blockchain. Instead, it provides you with a URL and signature within the NFT that you can hold as proof of ownership for the media in question.

This also holds true for social media posts. While you may claim ownership of tweets or posts, you cannot typically remove them from the web or get account access from where the tweet or post was published. This makes NFTs a broad-ranging form of collectibles, especially for those who want to hold certain pieces of internet moments as memorabilia.

What Are the Benefits of NFT?

Since NFTs are created on the blockchain, they leave many other proof-of-ownership mechanisms in the dust with their enhanced security, transparency, and operability.

Some of the most sought after advantages of NFTs include but are not limited to the following.

Transparency

By harnessing the record-keeping ledger features of blockchain, NFTs make it easier for sellers and buyers to maintain transparency regarding the asset in question.

Efficiency

Through dedicated marketplaces, NFTs allow creators, artists, and property owners to access interested buyers without a third-party, and vice versa. This makes transactions faster and easier.

Credibility

After learning what is NFT, you can rely upon the highly-secure mechanism of blockchain technology to prevent fraud and ensure credible proofs of ownership across a wide-ranging network of NFTs.

Easy Access

With dedicated tools, cryptocurrency exchanges, and NFT marketplaces, it is easy to reap the benefits of these digital assets with the same ease of use as traditional transactions.

How to Buy an NFT?

You can buy NFTs for digital art, media, and social media posts through dedicated platforms. This gives you access to specialized marketplaces where you can easily browse through collectible offerings and purchase those items that appeal to you the most.

These platforms include but are not limited to:

  • OpenSea
  • Rarible
  • SuperRare
  • Valuables by Cent
  • Binance NFT

Some platforms such as OpenSea are more dedicated to artworks, while others such as Valuables by Cent are more popular for tweets or social media posts. In fact, it was on Valuables by Cent where Twitter co-founder and former CEO Jack Dorsey sold the NFT of his first ever tweet for a whopping $2.9 million.

It is important to remember that once you purchase an artwork or social media post as an NFT, it may or may not give you full copyrights over the item. These details vary on a case to case basis, which is why you specifically need to look for them. This is a crucial point to remember while learning what is NFT.

Apart from these platforms, you can continue browsing the many other use cases of the mechanism that are currently not in place but may very well be in the future. This includes the sale of real estate, fractionalization of art pieces, and proof of ownership agreements for other assets. As more time passes and the NFT platform gains more development, these assets may become accessible to purchase by the general public.

How to Create an NFT?

You can create an NFT through the same platforms from where you can buy them. After going through any of the most popular NFT-supporting platforms, you can simply follow the instructions to make an NFT out of your art, tweet, or any other digital property. While you need to have a cryptocurrency wallet and a cryptocurrency exchange account for this to work, those requirements are not difficult to fulfill.

If you want to create an NFT for a real-world asset such as real estate, then you may need to go through more extensive processes. Since these mechanisms need more care from a technical and legal standpoint, the journey is lengthier than it is with digital assets alone.

You Should Continue Exploring the Evolving NFT Space

After learning what is NFT, it becomes far easier for you to explore all the benefits that these digital assets bring to the table. Since NFTs exist in a rapidly-evolving space, you should continue exploring them to see how you can benefit from existing offerings as well as fresh innovations associated with these unique tokens.