Everything You Need to Know About NFTs

The evolution of the crypto world has brought with it a whole series of terms and words that can seem like a whole new language. One of the most recent terms to come into use is the Non-Fungible Token or NFT.

The blockchain is about to change everything — from the way we communicate to the way we store information and even how we pay each other. If you want to stay on top of these big shifts, then you need to get on board with what’s known as NFTs — or nonfungible tokens. 

NFTs are a new type of token that represents a digital asset on the blockchain. They’re digital collectibles that can be used as a way to trade anything from virtual currency to physical goods.

In this guide, we’re going to provide you with all the information you need to know about this key element of the crypto scene.

What are NFTs?

NFT is an abbreviation for “Non-Fungible Token” or non-fungible asset. This means that it is a type of good, product, or digital work that cannot be modified or changed; it’s truly unique.

It should be noted that there are currently many types of NFTs. There are those that are used within NFT games, through to characters and digital arts.

Characteristics of NFTs

One of the most relevant characteristics of NFTs is that, as we mentioned, they are unique and you cannot create more than one. Also, these are not real physical objects but are housed in a blockchain such as Ethereum.

However, it is possible to personify an NFT; as has already been done by those who have bought this type of cryptographic asset. Also, non-fungible tokens have characteristics similar to those of a cryptocurrency. In other words, they cannot be easily hacked, falsified, or stolen, since the blockchain makes this act impossible.

Like all cryptocurrencies on the market, these assets also use a type of network to be sent from one ecosystem to another. ERC-721 of Ethereum is the most employed and used network so far. However, there are also NFTs on blockchains from Solana, Avalanche, or others.

How Does an NFT Work?

To understand how NFTs or non-fungible tokens work, it is necessary to point out that they have a characteristic close to conventional cryptocurrencies since they are housed in a blockchain. In addition, they also use smart contracts. For this reason, parameters can be established in NFTs to certify property; such as creator name, and creation date, among other data.

Thanks to this, you can tokenize all types of files and create an NFT, just add it to the blockchain and that’s it. It is possible to tokenize from digital works of art to memes, illustrations, or others. In simple words, its function is to guarantee the originality of a good, based on the added data that certify its ownership.

On the other hand, just like cryptocurrencies, non-fungible tokens need a market on which they can be traded. These platforms generally operate with the cryptocurrency Ethereum or USDT. However, in exceptional cases, such as Axie Infinity, those who wish to buy an NFT of the said video game must register in the game’s market to trade.

Value of an NFT: How Much Does Each Typically Cost?

Defining the price of an NFT is complicated, especially since it is defined by its level of popularity, its creator, and its usefulness, among other factors. In addition, the owner also influences its price on the market, since, by having all the rights of the non-fungible token, it can establish the price that best suits it.

This has made the market for non-fungible tokens one of the most volatile today. There is no list of established parameters that is useful to define their prices.

However, in blockchain video games that use NFT, it is possible to find factors that help determine their price. Since, in these games, NFTs have a level of utility, rarity, or tangibility. And depending on it, users establish a price.

Where to Buy an NFT?

Currently, thanks to the popularity of virtual arts and NFTs, a wide variety of markets have been created in which it is possible to buy non-fungible tokens. However, among the main and most used can be found:

  • Solanart.
  • OpenSea.
  • Binance NFT.
  • Rare.
  • Super rare
  • Nifty Gateway.
  • Mintable.
  • Atomic HUB.

Where is an NFT Kept When Purchased?

When you have purchased a non-fungible asset on a market it will immediately be saved to the market server. However, collectible tokens can also be hosted in a wallet, some of the best cold wallets are:

  • MetaMask
  • Trust Wallet
  • Coinbase Wallet.

Difference Between NFT and Cryptocurrencies

NFTs, despite having several similarities with cryptocurrencies, also have a high number of differences, the first being that they cannot generate more than 1 equal NFT. Since, let’s remember that each piece is original, unique, and based on different smart contracts; except for some cases.

Furthermore, another notable difference between cryptocurrencies and non-fungible tokens is that this last one cannot be mined under any circumstances. Because its creation is made by a person who tokenizes a specific work.

Let us also remember that cryptocurrencies are used as virtual currency. Whereas, non-expendable assets are simply digital art. And to conclude, NFTs also cannot be split in half and only part of them sold; fact that it is possible with cryptocurrencies.

NFTs Our Final Thoughts

NFTS open a whole new world of trading. While the concept can take a little while to become used to, there is no doubt that many people have made substantial profits from their acquisition and resale. As with anything in life, you should ensure that you fully understand exactly what you’re getting into before parting with your hard-earned cash.

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan