Everything You Need to Know About NFTs

  • 25th Mar'21
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“…Because of NFT.”

 

That’s a strange looking quote up there. Isn’t it? As it almost says nothing besides a few dots followed by three words in it. This may seem strange and even weird perhaps and that’s understandable. But if you take a closer and keen look at it, you will see the word NFT is in capital letters. Now, that holds the significance behind that quote.

If you are well active on social media and use it more than just for sharing pictures and random thoughts then you must have heard about one of the most trending news this past week. It was about a token that was sold for an astounding amount of $69 million. By now, some definitely may have had a flash of one such post they casually scrolled through. And for others, in general, who have no idea what it was about allow me to tell you.

 

Everydays: The Firsts 5000 Days

So, the news was about an artist who goes by the name Beeple who had sold one of his art for the above mentioned $69 million. This is the third highest price fetched by any artist for his work ever. Having heard about the tales of the famous “Mona Lisa” and “The Last Supper” paintings, this news can be somewhat digestible with a grain of salt. 

But the fact that Beeple’s painting named, “Everydays: The Firsts 5000 Days” doesn’t even exist in the real world and fact, is nothing more than a JPEG image might make it hard for a lot of us to wrap our head around this whole strange, weird thing that took place last week. And “The only reason this happened is because of NFT.”

Perhaps, now the quote above will completely make sense. However, a lot is still to be answered. So, let’s take a look at them one by one starting with the basic understanding of the NFT itself.

 

Non Fungible Token

 

What Does NFT Stand For?

NFT is an acronym that stands for non-fungible token. Fungible tokens are the ones that can be easily interchangeable. Say, for example, you have a certain bill of $100. Now, you can exchange this bill with someone for something without affecting its value. Similarly, non-fungible tokens cannot be interchanged. as each one of these tokens is a unique thing. Still, what’s NFT?

 

What is NFT?

An NFT can be determined as the certification and ownership of a digital item purchased online. NFTs can be anything ranging from a clip of a game such as Michael Jordan’s most iconic shot in an NBA game to a piece of artwork or even a quotation. In other words, it can be defined as limited edition tokens created by people that are only one of its kind.

To quote Chris Wailmer, an associate professor at the University of Pittsburgh Swanson School of Engineering and co-managing editor of a Ledger says, “The norm right now is people create these limited edition tokens where there is only one of that token.” Also, the NFTs are a product created as well as maintained by using Blockchain Technology.

 

Recommended: Dreaming Of Becoming A Bitcoin Billionaire?

 

What is Blockchain Technology?

Blockchain is a digital decentralized ledger created by an individual or a group of people who goes by the pseudonym, Satoshi Nakamoto. Its purpose is to track transactions of digital items or assets such as bitcoins or NFTs online. This is an independent technology that is neither governed by any central governmental administrator or any company. Instead, the whole process is maintained through a peer-to-peer network of computers out in the open meaning anyone can explore the data anytime for transactions.

 

Blockchain

 

How does the NFT System Works?

As stated above, NFTs are a part of the blockchain meaning it is similar to the cryptocurrencies such as bitcoin and dogecoin. However, it is its functionality and purpose that makes it different from cryptocurrencies. It stores data and information that are unique. Below are some of the reasons that will help you understand the uniqueness of the NFTs.

 

Indivisible: 

Simply stated, NFTs are a single whole unit meaning they cannot be divided or split into smaller denominations. Every single NFT that exists has its own, complete, and individual entity.

 

Easy Verification:

Since all the data related to every NFT is stored on the blockchain, NFTs can be easily verified and traced back to their historical ownerships and the original creator of it. So, NFTs make for swift and easy authentication.

 

Cannot be Destroyed Easily:

Since the NFTs data are stored in the blockchain, they are practically impossible to be destroyed. NFTs can neither be removed nor duplicated as well. Also, an important benefit of NFT is the ownership of it that remains with the collector or an individual who has purchased it instead of its original creators.

 

Recommended: Investing in Bitcoin: A Complete Guide

 

Is it Worth Spending on the NFTs?

As of now, the interest in NFTs has been over the top. So, if you are planning on investing in NFTs now then you can give it a go. As there is enough money to be made from it as was the case with Beeple’s piece of artwork. Even if reports are to be believed then NonFungible.com had estimated that the NFT market is now worth $250 million last year and that comprises a huge jump of 299% when compared to its value in 2019. This even means the expected value must have only been further skyrocketed after the recent incidents involving the NFTs.

 

Recommended: 7 Reasons Why Bitcoin Will Hit $50,000 In 2021

 

Can NFTs be Copied?

While the purchase of NFT can grant ownership to the person or a company, it doesn’t prevent its original creator and others from creating a copy of it. This means others can have a copy NFTs but the ownership of it will remain with the buyer or the collector. Thus, granting that its value doesn’t diminish due to plagiarism.

 

We, at OpenGrowth, are committed to keeping you updated with the best content on the latest trendy topics from any major field. Also, both your feedback and suggestions are valuable to us. So, do share them in the comment section below.

Sources/References:

*Note: The content published above was made in collaboration with our members.

About the author:

Sunny Samanta, OpenGrowth Content Team

A lone wolf by definition, a writer by heart, and a lost star with ambitions to light up the dark both inside and around me, sometimes by immersing myself into books or video games or traveling with a backpack to an uncertain destination believing that life is all about the choices we make and we don't.


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