Non-fungible tokens, or NFTs, are the latest cryptocurrency trend to go mainstream. NFTs have suddenly caught everyone’s attention after their popularity exploded with blockchain users, and Christie’s auction house sold the first-ever NFT artwork, a college of images by the digital artist Beeple, for a massive $69.3 million. But what actually are NFTs?
To put it into very simple terms, an NFT transforms a digital work of art or other collectible into a one-of-a-kind, verifiable asset that is easy to trade on the blockchain. However, they have left a lot of people feeling very confused.
What Are NFTs?
Non-fungible tokens, or NFTs, are pieces of digital content that are linked to the blockchain. The blockchain is the digital database that underpins cryptocurrencies like bitcoin and ethereum. Unlike NFTs, cryptocurrencies are fungible, which means that they can be replaced or exchanged with another identical one of the same value, in the same way as traditional currency.
An NFT us unique and is not mutual interchangeable, as no two NFTs are the same.
NFTs have more in common with collectables like rare coins, Pokemon cards, or stamps. NFTs create scarcity among otherwise infinitely available assets. You get an certificate of authenticity to prove it. NFTs are usually used to buy and sell digital artwork, and can come in the form of tweets, virtual trading cards, GIFs, images of physical objects, video game skins, virtual real estate, and more.
How Do I Buy An NFT?
Any digital image can be purchased as an NFT. However, if you are new to NFTs, there are some things that you should consider before you buy one. You will need to decide which marketplace you are going to buy from, what kind of digital wallet you need to store it safely, and what kind of cryptocurrency you will need in order to complete the sale.
Some of the most popular marketplaces include Mintable, Rarible, OpenSea, and Nifty Gateway. There are also some more niche marketplaces for more specific NFTs, such as Valuables for tweets or NBA Top Shop for basketball video highlights.
Pay attention to the fees before you buy. Some marketplaces will charge you a gas fee, which is the energy that is needed to carry out the transaction on the blockchain. Other fees can also include the costs for converting dollars into cryptocurrency and closing expenses. Make sure you do your research first and understand what you’re paying for.
How Do I Sell An NFT?
NFTs are sold on marketplaces and the process of selling can vary from platform to platform. In most cases, you will upload your content to a marketplace and then follow the platform’s instructions to turn it into an NFT. You will also be able to include any specific details, like a description of the piece, and a suggested price. Most NFTs are bought using ethereum, but they can also be bought with other ERC-20 tokens, like Flow and WAX. As with buying, do your research first.