You may have recently heard a lot about NFT’s and thought to yourself, what is an NFT? Well in short, NFT stands for Non-Fungible Token, and it is a new type of cryptocurrency that was created in 2017 to solve the problem of fungibility.
The term “fungibility” refers to the ability of cryptocurrencies to be exchanged without any loss of value. This means that if you have 1 Bitcoin (BTC) today, then tomorrow you can exchange it with another BTC and get exactly the same amount of money as before.
However, this does not apply to non-fungible tokens because they are unique objects that cannot be replaced by other similar items. For example, an item like a bottle of wine or a painting will always be 100% identical no matter how many times you buy them.
In contrast, an NFT token represents something unique such as a digital collectible card game character or a virtual pet.
The concept behind NFTs is based on the idea of scarcity. When you purchase an NFT, you own a piece of ownership over that specific object. As time passes, more people will want to own your NFT, so its price will increase.
Once you decide to sell your NFT, you will receive the full amount of money you paid for it plus a small transaction fee.
The first NFTs were released in October 2017, when CryptoKitties was launched. Since then, there has been a huge demand for these types of assets, which led to the creation of several different platforms that allow users to create their very own NFTs.
Today, there are hundreds of thousands of NFTs available on various exchanges.
Let’s take a look in a bit more detail about what is an NFT, how you can use them, and how you can purchase and sell them.
How Can I Use NFTs?
You can use NFTs in two ways:
1. You can trade them directly on the platform where they were created.
2. You can also convert them into ERC20 compatible tokens and transfer those to other wallets.
For both methods, you need to pay some gas fees to cover the cost of running the smart contract. These fees vary depending on the size of the transaction but usually range between 0.01–0.05 ETH per operation.
In addition to using NFTs for trading purposes, you can also use them to raise funds through crowdfunding campaigns. If you plan to do this, make sure you choose a good platform that allows you to set up a successful campaign.
How Do I Buy/Sell NFTs?
There are three main options for buying and selling NFTs:
• Exchanges
• Wallets
• Smart contracts
Exchange Platforms
Most NFTs are traded on crypto exchanges. One of the most popular ones is OpenSea, which offers a wide variety of different NFTs from all around the world.
Wallets
Some NFTs can only be purchased via a wallet. There are several different types of wallets, including hardware wallets, desktop wallets, mobile wallets and web wallets. Popular wallets include MyEtherWallet, Metamask, Trezor and Ledger Nano S.
Smart Contracts
Another way to purchase NFTs is by creating your own smart contract. This option requires advanced knowledge about programming languages and Ethereum smart contracts.
Which NFTs Should I Purchase?
If you are looking to invest in NFTs, you should consider purchasing one of the following categories:
• Collectibles
• Games
• Art
Collectibles
Many NFTs fall under the category of collectibles. Examples include cards from Magic: The Gathering, toys from Pokemon, figurines from Overwatch and action figures from Star Wars.
Games
A lot of games offer NFTs as rewards for players who complete certain tasks. Examples include World of Warcraft gold, skins from Fortnite or loot boxes from Destiny 2.
Art
Artists have started offering NFTs as a means to fund their projects. For example, a painting could be sold with a unique code that unlocks access to a digital version of the artwork.
Where Can I Sell my NFTs?
Once you have bought an NFT, you can either keep it or sell it. Selling your NFTs is easy and takes just a few minutes. All you need to do is go to the exchange where you bought your NFTs and select “Sell”. Then enter the details of your NFTs and click “Submit”.
Once you submit your request, the exchange will send out a notification to all connected wallets. When someone purchases your NFTs, you will receive a payment for the amount of NFTs that were sold.
Is It Safe To Trade NFTs?
Yes! Trading NFTs is safe because there is no centralized authority managing these assets. Instead, each NFT has its own blockchain address that acts as the owner of the asset.
This makes it impossible for anyone else to take control over the NFTs. In fact, if any hacker manages to hack into the blockchain address of an NFT, they would not be able to gain access to the NFTs themselves. They would instead be left with worthless tokens.
The best part about NFTs is that they cannot be hacked. As long as you keep your private keys secret, you can rest assured knowing that your NFTs are completely secure.
Can I Use My NFTs to Make Payments?
NFTs can be used to pay for goods and services. However, this feature is still being developed. Currently, many merchants accept NFT payments but there aren’t many options available.
You can use your NFTs to make payments through websites such as OpenSea.io, CryptoKitties.com, Decentraland.org and more.
Frequently Asked Questions
What Are Non-Fungible Tokens?
Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.
How Do I Buy An NFT?
You can purchase NFTs via any of the online NFT marketplaces, including OpenSea, Rarible, and SuperRare.
What Are The Benefits Of An NFT?
“Tokenizing” these real-world tangible assets makes buying, selling, and trading them more efficient while reducing the probability of fraud.
Final Thoughts
We hope that this article helped answer some of your questions about NFTs. If you have any other questions, feel free to leave them in the comments section below. We look forward to hearing from you soon!
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