What Is An NFT? Everything You Need To Know About Non-Fungible Tokens

What Is An NFT? Everything You Need To Know About Non-Fungible Tokens | mage Source: Pixabay

Just like cryptocurrencies are fast becoming a highly successful globally decentralised alternative digital form of payment, a new decentralised digital store of value is fast rising and gaining global popularity and acceptance, and they’re called Non-Fungible Tokens, also known widely as NFTs.

NFTs aren’t just existing as a proof of concept, but are in widespread use today as a non-duplicable digital proof of ownership for so many items on the internet ranging from land to images, art, and so much more.

In the short time of the existence of NFTs, people have been able to make millions of dollars from purchasing NFTs that were worth a few hundred to a few thousand dollars and the global NFT trade now runs into billions of dollars.

If you’re looking to learn everything about Non-Fungible Tokens (NFTS), this article is for you.

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What Does Non-Fungible Mean?

The ability of a physical or digital asset to be fungible means that the commodity can easily be interchanged for another type like it. For instance, one US dollar can be interchanged for another US dollar and still have the same value and non-uniqueness since they carry out the same function.

Non-fungible means that the product or asset cannot be easily interchanged for another like its kind because they do not carry the same value no matter how similar they appear.

 

What Is A Non-Fungible Token (NFT)?

A Non-Fungible Token also called an NFT, is a cryptographic asset stored on a blockchain network and has unique properties in the form of identification codes and metadata to differentiate them from each other irrespective of how similar the external property is or may appear.

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How Are Non-Fungible Tokens (NFT) Different From Cryptocurrencies?

NFTs are different from cryptocurrencies because of their interchangeability. They cannot be exchanged or traded for a similar asset like cryptocurrencies can, and so, are called non-fungible tokens, unlike cryptocurrencies that are fungible.

 

Why Are Non-Fungible Tokens Important For Businesses & Creators?

NFTs are important for businesses and creators because they enable physical assets to uniquely be represented digitally. These assets can range from artworks to real estate, loans, articles, international passports and almost every property you can think of.

Unlike images that can easily be downloaded from the internet, they cannot be sold. Only the NFT can be sold and the person who has the NFT has the rights to the image and can generate revenue from its sale without the need of intermediaries or brokers.

Royalty-based smart contracts can also be programmed into an NFT so that every time the NFT is resold, the original owner of the NFT gets paid royalties.

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How Do Non-Fungible Tokens (NFTs) Work?

Non-fungibility doesn’t make NFTs a good medium of exchange, but only a representation of an asset, unlike physical currency and cryptocurrency. For instance, a bitcoin or a dollar will always be good for another bitcoin or a dollar. Their values will always be equal to each other. And this applies to every currency and cryptocurrency when paired against each other of the same kind. Fungibility then makes them a secure and stable medium of exchange for each other. But NFTs are irreplaceable. Every token is unique, and this makes it impossible to simply replace one with another.

 

What Are Non-Fungible Tokens (NFTs) Used For?

Since NFTs are irreplaceable, their primary use is to represent digital or physical assets uniquely on the blockchain network. their uses can range from the following but are not limited to them:

  • Real estate
  • Artworks
  • International and local passports
  • Blog articles
  • Social media posts
  • Collectibles
  • Finance
  • Gaming
  • Music
  • Logistics
  • Fashion & Wearables
  • DeFi
  • Events & Ticketing
  • Healthcare
  • Advertising

And so much more

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How Safe Are Non-Fungible Tokens (NFTs)

Because of the non-fungibility of NFTs, they’re very safe as no one can easily replicate your NFT to sell them anywhere due to the fact that the identification codes and metadata would be different, which are what is used to identify the authenticity and ownership of an NFT.

 

What Is A Non-Fungible Tokens (NFTs) Collection?

An NFT Collection is a collection of a series of NFTs under one group name.

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How To Buy Non-Fungible Tokens (NFTs)

Most NFTs are purchased with the Ether cryptocurrency on an NFT marketplace using the Ethereum network and stored in a digital wallet. Although other blockchain networks are now enabling the creation, purchase and sales of NFTs with their own networks like Solana. When the NFTs are purchased, they’re stored in a digital wallet like Trust Wallet, Metamask, etc.

 

Popular Non-Fungible Tokens (NFTs) Market Places

Some of the most popular NFT marketplaces are:

  • OpenSea
  • Rarible
  • SuperRare
  • Binance NFT
  • Gate.io NFT
  • Crypto.com NFT
  • Nifty Gateway
  • Foundation

And much more

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The Most Popular Non-Fungible Tokens (NFTs) Collections At Some Point

The most popular NFT collections that have each generated multimillions of dollars in trading volumes are:

  • Cryptopunks
  • Bored Ape Yacht Club
  • Meebits
  • CyberBrokers
  • Mutant Ape Yacht Club

And much more.

 

How To Make Money From Non-Fungible Tokens (NFTs)

There are several ways to make money from NFTs. Some of them are:

  • Buy at a low price and sell at a higher price on an NFT marketplace
  • Rent out your NFT
  • Gain a royalty commission every time an NFT you created is resold to someone else
  • Buying, selling and renting out assets like land or tools in NFT video games

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Should You Buy Non-Fungible Tokens (NFTs)?

If you want to own the rights to a digital asset, buying an NFT is a great move to make. This will ensure that it is always ever be one of a kind and that you control all rights to the asset.

 

How To Create Non-Fungible Tokens (NFTs) From Scratch

To create. your own NFT, you can follow these steps:

  1. Pick an item.E.g an image file that you want to turn into an NFT
  2. Decide on the blockchain network you want to host the NFT. E.g Ethereum, Solana, etc
  3. Create and set up a digital wallet.
  4. Choose an NFT marketplace that uses the blockchain network you want to host it on.
  5. Upload your file on the NFT marketplace.
  6. Set up the sales process for the NFT on the marketplace.
  7. Your NFT is fully created and ready for sales.

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The Future of Non-Fungible Tokens (NFTs)

In the future, almost everything will be an NFT and it will help control piracy and also. establish ownership for literally everything from social media posts to real estate, to music, to certificates, and much more.

 

To Sum It Up

NFTs are the ultimate unique identifiers of ownership, especially as the networks on which the proof of ownership is stored is decentralised and cannot be controlled or manipulated by any third parties. Since NFTs can literally be created for almost anything, owning the right types of NFTs can help you generate a lot of revenue over time, especially as its value skyrockets due to scarcity, non-fungibility and the popularity of the NFT project.

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What are your thoughts on this article about NFTs? Let me know by leaving a comment below.