What is an NFT? You don’t have to be a nerd to understand this

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When you first hear NFT, the first thought is always, What is an NFT? Everyone’s talk­ing about NFTs, but not every­one clear­ly under­stands what they are. The mar­ket­place for these dig­i­tal assets is still new and con­fus­ing, mak­ing it hard to com­pre­hend their worth and how you can buy or sell them. 

In this post, I’ll clar­i­fy some of the mys­ter­ies behind NFTs so you can decide whether they’re worth buy­ing into.

What is an NFT?

An NFT is a non-fun­gi­ble token, which means its val­ue and char­ac­ter­is­tics can­not be dupli­cat­ed or sub­sti­tut­ed. This makes it unique and prov­ably authentic.

What is an NFT

NFTs can be used in games, col­lectibles, and oth­er dig­i­tal items. They’re also not lim­it­ed to blockchain tech­nol­o­gy; for exam­ple, you can own a lim­it­ed edi­tion of your favorite artist’s album on vinyl or CD.

NFTs are dif­fer­ent from tra­di­tion­al cryp­to assets because they don’t need to be divis­i­ble into small­er units like Bit­coin (BTC). For exam­ple, one BTC can be bro­ken into 100 mil­lion satoshis (known as the “satoshi”), but this doesn’t make sense when talk­ing about NFTs like art­works or game items that have ser­i­al num­bers asso­ci­at­ed with them (for exam­ple: “Object 1”). A sin­gle piece of art could only ever exist once—so there would nev­er be enough avail­able shares/pieces for every­one who wants one!

NFTs can be in the form of:

  1. Col­lectible items ( includ­ing avatars)
  2. Vir­tu­al land
  3. Video game items
  4. Art (Dig­i­tal or physical)
  5. Media and music
  6. Memes
  7. Gam­ing Items
  8. Sport moments
  9. Real-world assets
  10. Domain names

Who’s been collecting them?

NFT col­lec­tors include gamers, col­lec­tors, investors, artists, fans, and celebri­ties. Some of these users are mak­ing their dig­i­tal assets for trad­ing, and oth­ers are just try­ing to get their hands on the rarest items out there. As you might expect from a new tech­nol­o­gy that can be used across mul­ti­ple indus­tries, NFTs haven’t real­ly been lim­it­ed to one type of user or use case yet.

Why are NFTs so popular right now?

NFTs are a new way to col­lect and trade art, invest in art, own art, and even own a part of a com­pa­ny. It’s also the most secure way to authen­ti­cate ownership.

NFTs are cer­tifi­cates of own­er­ship for the meta­verse. NFTs make one own a piece of the inter­net in Web 3.0, unlike Web2.0, which was focused on renting.

Why is this so pop­u­lar? Because NFTs are dig­i­tal assets that exist on the blockchain (the decen­tral­ized ledger sys­tem that pow­ers cryp­tocur­ren­cies such as Bit­coin). Each NFT has one unique own­er, who can prove own­er­ship by hold­ing the pri­vate key of their wal­let hold­ing that token. I guess that’s what makes it special.

When did the trend start?

NFTs have been around for a while, but they’ve recent­ly become more pop­u­lar. The NFT stands for “non-fun­gi­ble token.” This means that each token is unique and can­not be exchanged with anoth­er token.

NFTs are built on a blockchain and are essen­tial­ly dig­i­tal assets that can rep­re­sent any­thing from art to music to videos. The first NFTs were cre­at­ed in 2014 dur­ing the Cryp­to Bull­run when peo­ple start­ed buy­ing bit­coin as an invest­ment vehi­cle because they thought it would make them rich (which it did).

NFTs are built on a blockchain

NFTs are built on a blockchain.

In case you’re not famil­iar with it, a blockchain is essen­tial­ly a pub­lic ledger of trans­ac­tions that uses cryp­tog­ra­phy to secure and val­i­date records (or blocks) of infor­ma­tion. It can be used to record any­thing involv­ing mon­ey or value—for exam­ple, cryp­tocur­ren­cy or oth­er kinds of dig­i­tal assets like NFTs. Because the infor­ma­tion is stored in an immutable dis­trib­uted ledger across thou­sands of com­put­ers rather than being con­trolled by one author­i­ty, blockchains can be decen­tral­ized, mean­ing they don’t rely on any cen­tral serv­er or point of control.

As such, when you buy an NFT from some­one else on OpenSea (or any oth­er mar­ket­place), the trans­ac­tion will be record­ed in a dis­trib­uted ledger that keeps track of each pur­chase made through­out time.

What is an NFT stock?

In short, NFTs are a form of cryp­tocur­ren­cy. But they’re not a stock or a share; they’re not secu­ri­ties. In fact, they aren’t even mon­ey in the tra­di­tion­al sense. They are dig­i­tal assets rep­re­sent­ing some­thing oth­er than mon­ey – like art or real estate — and can be secure­ly trans­ferred from one user to anoth­er via blockchain technology.

What is minting an NFT?

Mint­ing an NFT is the process of cre­at­ing new NFTs. When a cre­ator mints an NFT, they are cre­at­ing it from scratch with their own code and design. This gives them full con­trol over the asset and allows them to set para­me­ters such as scarci­ty and price for the token. The cre­ator also decides how many tokens will be cre­at­ed in total, what per­cent­age of those tokens will go to them­selves (or anoth­er group), and how many addi­tion­al tokens will go into cir­cu­la­tion lat­er on through trad­ing or oth­er means. Mint­ing is typ­i­cal­ly done by devel­op­ers who want to use blockchain tech­nol­o­gy to man­age dig­i­tal assets like domain names or pre­cious met­als; how­ev­er, some plat­forms can mint non-fun­gi­ble tokens with­out the required pro­gram­ming knowledge!

How to create an NFT

Cre­at­ing an NFT is a com­pli­cat­ed process but can also be very reward­ing. There are many dif­fer­ent kinds of NFTs, some more com­plex than oth­ers. Cre­at­ing your unique item to hold val­ue in the blockchain would be an excit­ing project for any developer.

There are sev­er­al plat­forms avail­able that make it easy to cre­ate your dig­i­tal col­lectible or game piece:

  • OpenSea: A mar­ket­place plat­form where any­one can buy and sell their indi­vid­u­al­ized cryp­to-items (or “cryp­to-col­lectibles”). These items can rep­re­sent any­thing from vir­tu­al land in a game to rare paint­ings (which don’t exist in phys­i­cal form).
  • Rare Bits: This plat­form allows devel­op­ers to cre­ate their own dig­i­tal assets using Ethereum tech­nol­o­gy — all with­out ever touch­ing a sin­gle line of code!

How to buy NFTs?

You can pur­chase NFTs on a mar­ket­place or direct­ly from the creator.

If you want to buy NFTs in a mar­ket­place, there are sev­er­al options avail­able to you:

  • There are a num­ber of web­sites that offer this ser­vice for free. These sites include OpenSea and Rare Bits. They also have mobile apps that allow you to trans­fer your dig­i­tal assets between dif­fer­ent devices eas­i­ly and securely.
  • Some exchanges also have an option where users can trade dig­i­tal goods such as cryp­to col­lectibles or game accounts for cash, but these trans­ac­tions often take longer than those made in mar­ket­places because they involve more par­ties and agree­ments about pay­ment meth­ods and deliv­ery times before com­plet­ing the trade.

How to sell NFTs?

There are sev­er­al ways to sell your NFTs. You can list them on a mar­ket­place, such as OpenSea or Rarebits. Like­wise, you may choose to sell them on a cen­tral­ized exchange such as Coin­base Pro. If you don’t want to deal with the has­sle of list­ing and sell­ing your items your­self, there are peer-to-peer mar­ket­places that allow sell­ers to con­nect direct­ly with buy­ers for an eas­i­er experience. 

Final­ly, if you’ve got some NFTs so rare that there’s no chance any­one else wants them for their collection—or even knows what they are—then local exchanges can be anoth­er great out­let for sell­ing these unique dig­i­tal goods.

NFT Marketplaces

Legacy and original marketplaces

You may have heard the term “lega­cy mar­ket­place” and won­dered what it means. This term refers to a plat­form that has been around for sev­er­al years and is con­sid­ered one of the orig­i­nal mar­ket­places for NFTs.

There are also new­er plat­forms called orig­i­nal mar­ket­places. They often offer more advanced fea­tures than lega­cy mar­ket­places, but some­times don’t have as much sup­port from cre­ators when it comes to sell­ing your items on their platforms.

The best mar­ket­place for you will depend on what type of sell­er you are: whether you’re an artist who wants to sell dig­i­tal art direct­ly from their web­site; a play­er who wants to buy dig­i­tal assets in games like League of Leg­ends or Fort­nite; or some­one who is inter­est­ed in col­lect­ing rare items like cryp­to kit­ties or Pepe memes (which can only be pur­chased through cer­tain types of exchanges).

What to keep in mind when using NFT marketplaces

You’ll have to make a few sac­ri­fices to man­age your dig­i­tal assets, but it’s worth it. Here are some of the most impor­tant things to keep in mind while using NFT marketplaces:

  • Keep your account secure. This is a giv­en but still important—if some­one gets access to your account and man­ages to hack into it, they can steal your NFTs and do what­ev­er they like with them. Make sure you use two-fac­tor authen­ti­ca­tion (2FA) on all accounts where pos­si­ble and don’t reuse pass­words between sites.
  • Pro­tect your pri­vate keys. If some­one has access to your pri­vate key, then they also have access to all of the funds asso­ci­at­ed with that address/public key pair—so make sure nobody else knows what it is! Pri­vate keys should nev­er be shared with any­one for any rea­son; any­one who has this infor­ma­tion could use it as lever­age in future deal­ings with you or sell them off with­out any con­se­quences if they want­ed to…so just don’t tell any­body! You might even want to con­sid­er stor­ing this some­where offline like an encrypt­ed USB dri­ve hid­den away some­where safe so nobody else can ever get their hands on these sen­si­tive bits of data again (it’s para­noid but trust me).

What NFT Marketplace is the best?

The best NFT mar­ket­place is one that makes it easy for you to find what you’re look­ing for. This means hav­ing a robust search engine, detailed infor­ma­tion on each token and list­ing, good reviews from oth­er users, and an intu­itive inter­face that doesn’t require too much effort to navigate.

The first thing to con­sid­er when choos­ing an NFT mar­ket­place is whether it’s cen­tral­ized or decen­tral­ized. Cen­tral­ized mar­ket­places are more tra­di­tion­al, with the com­pa­ny behind them con­trol­ling all of the funds on their plat­form — this means they can also freeze trans­ac­tions if they sus­pect fraud­u­lent activ­i­ty (which hasn’t yet hap­pened). Decen­tral­ized mar­ket­places use blockchain tech­nol­o­gy to allow users com­plete con­trol over their finances through smart con­tracts; how­ev­er, this also means there isn’t a cen­tral author­i­ty main­tain­ing order with­in these plat­forms — which could make some users feel uneasy about using them.

The most pop­u­lar mar­ket­places are cur­rent­ly OpenSea and Rari­ble. There are, how­ev­er, many oth­er mar­ket­places you can access through a quick google search.

You don’t need an NFT wallet to buy or sell.

If you’re look­ing to buy or sell NFTs, hav­ing an NFT wal­let is unnec­es­sary. Instead, you can buy and sell them direct­ly on the marketplaces.

NFTs are not cryp­to-cur­ren­cy like Bit­coin and Ethereum, nor are they tokens like ERC-20 tokens in the Ethereum blockchain. They’re also not cryp­tocur­ren­cies (though some have called them that).

The eas­i­est way to think of NFTs is as dig­i­tal col­lectibles that have val­ue because peo­ple want them—like rare base­ball cards or Poke­mon cards.

It’s also impor­tant to remem­ber that NFTs are like stocks in that you can buy and sell them.

In order to buy or sell an NFT, you need to use an exchange or a mar­ket­place. The most pop­u­lar ones are OpenSea and Rari­ble. Once there, you can browse through every­thing avail­able for sale (just like any oth­er online store) and make your selec­tion as if it were any oth­er item—except this time; it’s an NFT!

Tread carefully in the NFT space

The mar­ket­place for these dig­i­tal assets is still new and con­fus­ing, mak­ing it hard to under­stand what they’re worth and how you can buy or sell them.

NFTs are a new way of own­ing dig­i­tal assets. They’re dif­fer­ent from cryp­tocur­ren­cies and ERC-20 tokens, and they’re not secu­ri­ties. NFTs have a fixed sup­ply that’s unique to each token, mean­ing they can’t be dupli­cat­ed or stolen (as with cryptocurrency).

There are also poten­tial scams with every new trend, so stay vig­i­lant about buy­ing or sell­ing your NFTs—and do your research before div­ing in!

Spend some min­utes to watch this video from Coin Bureau on NFTs scams:

Conclusion

Now that we’ve cov­ered all the basics, you should feel bet­ter equipped to nav­i­gate the world of NFTs on your own. There are still many things we don’t know about this trend and its future impact on dig­i­tal art, but one thing is for sure: it’s def­i­nite­ly not going away any­time soon. If you’re inter­est­ed in cryp­to art or blockchain trad­ing, then con­sid­er set­ting up an account with a cryp­tocur­ren­cy exchange today. Hap­py trading!

The main take­away should be that NFTs are still a new and devel­op­ing tech­nol­o­gy that holds great promise for artists who want to sell their work direct­ly with­out going through tra­di­tion­al chan­nels (like galleries).

Did our arti­cle answer the ques­tion What is an NFT? Please com­ment below if you believe we did a good job on the topic. 



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