The rise of cryptocurrencies such as bitcoin also favored the spread of NFTs. Unless you lived on Mars in the last year, you probably heard about them, probably without a clue about what they are. We got you covered with our quick guide to NFTs.
What does NFT stand for?
NFT stays for non-fungible token. This wasn’t clear, sorry. Non-fungible means unique. Therefore, it can’t be either reproduced or interchanged. Bitcoin and physical money are fungible tokens. If you trade a bitcoin for another one, you’ll get the same thing – having the same value. NFTs have a digital signature which makes it impossible to exchange them for another or equal.
What do they have to deal with cryptocurrencies?
They are both based on blockchain cryptography technology. A blockchain is a digital ledger that collects information in groups called blocks – having a specific storing capacity. A block is closed and linked to the previously topped-up one, forming a blockchain when filled. This technology records information in a complex way to crack, change, or hack.
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How does an NFT work?
NFTs allow the assignment of the ownership of a unique piece of digital data, trackable by using Ethereum’s blockchain as a public ledger. Ethereum is a decentralized global software platform mostly known for its cryptocurrency ether – ETH, and it is the most used blockchain technology for NFTs. An NFT is minted – created – from digital objects representing either a digital or non-digital asset.
What can be an NFT?
An NFT is a digital asset that can come in the form of art, music, in-game items, videos, and sneakers in a fashion line. A tweet could be an NFT too. They can be compared to any physical collectible, but they come in a digital form. Instead of buying a painting, a comic book, or an action figure, the buyer gets a digital file.
Why are NFTs so popular?
Despite being around since 2014, the main reason behind NFTs’ success is the boom of cryptocurrencies and blockchain technology. What made them stand out was the fact that they became a popular way to buy and sell artwork online. The fact that they represent unique ownership appeals to collectors, who can claim to have the exclusivity of a painting. An NFT can only have one owner at a time.
How can I buy an NFT?
Before buying your first NFT, be aware that most of them are paid with ETH. How to get ETH? If you have an account with a cryptocurrency exchanger – such as Binance, Kraken, or FTX – you can easily purchase ether and send them to your wallet, which can be connected to NFTs marketplaces. Most sell NFTs through auctions where you can bid for that given NFT. Some of them also trade tokens at a fixed price.
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What are the major NFTs marketplaces?
All marketplaces allow users to display, list, and advertise their NFTs, and users can also exchange their NFTs directly by sending them from one wallet to another. Furthermore, most marketplaces provide wallets to store NFTs; some also allow users to mint NFTs from scratch.
Depending on the marketplace you choose, you’ll find different kinds of NFTs. OpenSea claims to be the largest existing NFT marketplace, hosting various types of collectibles – from artwork to video game items. NBA Top Shot is a platform where users can buy and trade the collectibles of the most famous basketball league in the world – such as highlights, player stats, and box scores.
Your next purchase?
What are you going to buy then? A drawing? A sword from your favorite video game? You have plenty of choices, but at least now you know more about NFTs.