NFTs or Non-fungible tokens are amongst one of the most talked-about topics in 2020. You must be wondering what it is and why was it the talk of the town? Well, NFTs are unique crypto assets. When you send a Bitcoin to somebody, it does not need to be the same token when he/she returns it because cryptocurrencies are fungible assets. But, unlike cryptocurrencies, each NFT comes with unique properties, and that’s why it cannot be interchanged with another.
Let us understand it with an example, suppose you have $1 billion in your pocket, and there is $1 billion in someone else’s possession, and both the bills are authentic. This means they have the same value, and no one will lose or gain anything from the trade if they are exchanged. This is what happens with fungible assets; they are interchangeable because their values are the same.
On the contrary, non-fungible assets may resemble each other and belong to the same category, but the information they hold is unique. They are non-fungible as the information held by each one of them is different and exclusive. Hence, they can not be exchanged.
Blockchain is a shared, decentralized, distributed ledger that records the transactions and tracking of digital assets in a business network. It is a public distributed ledger, which works using hashing encryption. Each block has a digital signature in the form of a hash value.
It records the information in a way that is difficult or impossible to change, hack, or cheat the system. Blockchain technology stores data in blocks that are used to record transactions across many computers. This ensures that each unit of value was transferred only once to avoid the problem of double-spending. Read more.
Digital assets do not have any unified representation in the digital world, but in the case of NFTs, developers are allowed to build common, inheritable, and reusable standards relevant to all NFTs when represented on public blockchains. This standardization makes it different from other crypto assets and serves as building blocks for digital assets.
The ability of NFTs to exchange and make use of information paves the way for free trade in open markets. This means that users can easily trade items outside of their original environments and transfer them to a place where they have the chances of getting the maximum advantage, be it in bidding, bundling, eBay-style auctions, trade-in any currency, etc. This allows the easy and free movement of NFTs across various ecosystems. It also makes them displayable inside several wallets of virtual worlds when a new NFT project is launched, enabling them to be tradeable on a plethora of marketplaces.
As NFTs are instantly tradeable, their liquidity becomes higher automatically, allowing the non-fungible token marketplaces to cater to a wide variety of audiences. It further paves the way for better and greater exposure of these assets for a larger pool of buyers irrespective of their experience.
Indivisible is yet another exclusive feature of non-fungible tokens. It means that they can not be sent in smaller denominations. Either you have to buy the complete cost of a digital item or buy no item. Most NFTs are indivisible into smaller units. Unlike bitcoins, you can not send a portion of an NFT to someone.
Different types of NFTs have their own setup process. One of the most popular online marketplaces to set up digital art non-fungible tokens is OpenSea. Here is how you can make and sell digital art NFT:
First, you need to set up a digital wallet to store NFTs and crypto. MetaMask is the digital wallet recommended by OpenSea.
1. Now, go to OpenSea and click on the top-right profile icon to select My Profile.
2. Click Sign in and set up your account by following the instruction displayed on your screen.
3. When you are done with setting up the account, go to the account page and click on the create in the top right and select My Collections.
4. Go to Create new collection, select Create, and fill up the details for your collection.
5. Once the collection is finalized, click on Add New Item and upload the asked metadata. Metadata includes image, video, an audio file, and your neft name
6. Lastly, click Create, and you are ready with your digital art NFT.
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Now, we very well know that NFT exists and trades on the blockchain network, it has a wide range of applications. Some of the ways through which you can use NFTs are:
To construct and curate collections
You can showcase your public NFTs list through social media or decentralized applications.
It can be used in games and other decentralized applications
You can exchange or gift or trade NFTs with other people
Purchase NFTs in a marketplace
Go through the below links to know more related to non-fungible tokens:
On March 11, 2021, Mike Winkelmann, the digital artist famously known as Beeple, made history when his NFT art titled “Every day's: The First 5000 Days” NFT was sold at Christie’s for over $69 million. The art is a collage of images from his "Everyday's" series. Get to know his views on selling digital NFT art.
Blockchain-based non-fungible tokens are the talk of the town right now. With so many theories coming out one might get confused about what it really is. To explain it in an easy way we can say that it is an asset that can never be taken away. NFTs are something unique that isn’t mutually interchangeable. Understand it in a better way through a series of examples. Click to read.
Contributor: Jyotshana Rani
Jyotsana is very keen to express her views on new topics and wants readers to remember her through her writing. She is passionate about reading and believes that words wield the power of changing the scenario and she uses them to encourage people to the best of her knowledge.
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