What is An NFT?
An NFT, which stands for Non-Fungible Token, is a digital token that proves your ownership over a digital asset. It could range anything from digital art, videos, and music to everything in the digital realm. Token in this scenario refers to a digital certificate stored on a secure, distributed database called Blockchain.
An NFT is a non-interchangeable token in its most basic form, which means it has a single owner and cannot be co-owned. When you trade and transact an NFT, you either buy it on the whole or sell it whole. You have it stored in your portfolio/wallet.
These tokens’ price/value is defined by the interest of other enthusiasts of the same category. Plus, like Bitcoin and other cryptocurrencies, any government or bank does not regulate them. They are peer-to-peer owned and are created through various Blockchain technology.
They can be created easily compared to Bitcoin, but the asset is only valuable if you find the right crowd for it. This is similar to owning physical art pieces and collector’s items. Some NFTs have been sold in multi-millions, but if you don’t find its target audience, it could be worth pennies.
Non-Fungible NFT Explained
What exactly does non-fungible means? In its primitive form, non-fungible means it is an asset that cannot be substituted. It has unique attributes that make it different in its asset class. Paintings, digital art, and trademarks are prime examples of non-fungible asset ownership.
Fungible NFT Explained
Fungible, in contrast, means the opposite as it represents an asset that can be exchanged or substituted, but it will still hold the same value. Fungible assets are interchangeable, with dollars, gold, and Bitcoin being prime examples. An example of this would be if I lend you $10 cash and you return that back to me in two $5 notes. They have changed their physical appearance, but they are still of the same value – meaning they are fungible.
Who Started The Concept of Non-Fungible Token?
NFTs are a relatively newer invention and came much later after the establishment and stabilization of Bitcoin. The credit for the creation of NFT is given to software developers Matt Hall and John Watkinson, who created the first NFT on Ethereum Blockchain called CryptoPunks.
However, it wasn’t until Axiom Zen, a Vancouver-based venture studio, introduced CryptoKitties that the craze for NFTs took off to the next level. CryptoKitties was a Blockchain-based virtual game that allowed participants to adopt, breed, and sell virtual cats while holding them in crypto wallets.
It wasn’t long after the game’s introduction that it became a global hit, with CryptoKitties clogging the Ethereum network and individuals reaping enormous gains from the first NFT invention.
How Can You Create An NFT
Now that you know what an NFT is, we are sure you must be thinking whether or not you can create an NFT yourself, and the answer is YES! To make the understanding of this process easier for you, we have listed these points in bullets:
- Secure a Crypto Wallet
- Find your ideal marketplace to sell
- Create your NFT (it can be anything from an image, illustration, animation, video, etc.)
- Market it as a scarce product
- Sell it
How is an NFT Valued?
Moving on to the next question, you must be wondering, “what is the standard on which NFTs are valued?” NFT is valued the same way physical art is. If there is a demand for them, you can expect to earn multi-millions from each piece you sell, but they can be worthless if you don’t find the right market.
Future of NFT
In 2021, NFTs grabbed the world by surprise, ushering in a digital creative revolution while also being one of the fastest-rising asset classes. Non-fungible token technology has enabled artists to sell digital originals without intermediaries while also receiving royalties on subsequent sales of their art.
Still, experts believe that this is only the start of the capabilities that non-fungible tokens offer to the web 3.0 world. In the upcoming decade, NFTs can reach a whole new level where their digital counterparts could well replace physical ownership of art.
This is why the hottest question on everyone’s lips in the world of Crypto is, “Can NFT go past Bitcoin market cap to become the most valued crypto commodity?” We believe with Metaverse in full swing on the horizon, anything and everything is a possibility.
NFTs are the hottest digital commodity currently available in the market. Since 2021, they have charted a journey for themselves that has made them the talk of the town. Yet, there are a lot of new beginners and a lot more people who are becoming interested in Crypto every day who know nothing about them.
What are your thoughts about NFT. Are they here to stay, or are they another fad that’ll fade away with the passing of time?