What is an NFT? Non-fungible tokens explained

Non-fungible tokens, or NFTs, are the latest cryptocurrency phenomenon to go mainstream. And after Christie’s auction house sold the primary-ever NFT artworkwork — a collage of images by digital artist Beeple for a whopping $69.3 million — NFTs have out of the blue captured the world’s attention.

So what are NFTs?

In the simplest phrases, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets which are straightforward to trade on the blockchain.

Although which may be removed from simple for the uninitiated to understand, the payoff has been enormous for many artists, musicians, influencers and the like, with investors spending top dollar to own NFT variations of digital images. For instance, Jack Dorsey’s first tweet sold for $2.9 million, a video clip of a LeBron James slam dunk sold for over $200,000 and a decade-old “Nyan Cat” GIF went for $600,000.

However NFTs aren’t exactly new. CryptoKitties, a digital trading game on the cryptocurrency platform Ethereum, was one of many authentic NFTs, allowing people to buy and sell virtual cats that were each unique and stored on the blockchain.

So why is the NFT phenomenon taking off now?

What are NFTs?

Non-fungible tokens, or NFTs, are items of digital content material linked to the blockchain, the digital database underpinning cryptocurrencies such as bitcoin and ethereum. Unlike NFTs, those assets are fungible, meaning they are often changed or exchanged with another equivalent one of the similar value, a lot like a greenback bill.

NFTs, on the other hand, are distinctive and never mutually interchangeable, which means no two NFTs are the same.

Think of Pokémon cards, uncommon coins or a limited-edition pair of Jordans: NFTs create scarcity among in any other case infinitely available assets — and there is even a certificate of authenticity to prove it. NFTs are typically used to purchase and sell digital artwork and might take the form of GIFs, tweets, virtual trading cards, images of physical objects, video game skins, virtual real estate and more.

Learn how to buy NFTs

Essentially, any digital image will be bought as an NFT. But there are just a few things to consider when shopping for one, especially if you happen to’re a newbie. You may have to decide what marketplace to purchase from, what type of digital wallet is required to store it and what kind of cryptocurrency you’ll want to complete the sale.

A number of the most typical NFT marketplaces embody OpenSea, Mintable, Nifty Gateway and Rarible. There are additionally niche marketplaces for more particular types of NFTs, too, akin to NBA Prime Shot for basketball video highlights or Valuables for auctioning tweets resembling Dorsey’s presently up for bid.

However be wary of fees. Some marketplaces charge a “gas” payment, which is the energy required to complete the transaction on the blockchain. Different fees can include the costs for converting dollars into ethereum (the currency most commonly used to buy NFTs) and shutting expenses.

In the event you’re curious and need to know more about what it’s like to buy an NFT, we went ahead and acquired one. (And sure, it is a cat.)

How to sell NFTs?

NFTs are additionally sold on marketplaces and the process can range from platform to platform. You may essentially upload your content to a marketplace then comply with the directions to turn it into an NFT. You may be able to include specifics equivalent to an outline of the work and prompt pricing. Most NFTs are purchased using ethereum but will also be bought with other ERC-20 tokens reminiscent of WAX and Flow.

The best way to make an NFT?

Anyone can create an NFT. All that’s wanted is a digital wallet, a small purchase of ethereum and a connection to an NFT marketplace where you’ll be able to upload and turn the content into an NFT or crypto art. Simple, proper?

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