In a rather surprise move, 2021 seems to be the year of NFTs or non-fungible tokens. Since March, we have seen various items being memorialized into NFTs and sold often for staggering prices. But it only seems to be a clear topic to those that know about it. Let’s get into the basics.
What are NFTs?
NFTs are verifiable digital assets that are traded on blockchain technology. They are one-of-a-kind and allows for the owner to prove an asset is theirs. So, you may ask, what exactly happens when someone buys an NFT? Well, buyers of NFTs receive a digital file that claims ownership of some asset. This is away from the physical objects we buy and have.
Are NFTs and cryptocurrency the same?
No! The key difference between NFTs and cryptocurrency is interchangeability. There are numerous bitcoins on the blockchain and and they are all interchangeable. Cryptocurrencies are, by design, fungible. This implies that they can be traded or exchanged for one another. Digital coins are also supposed to be equal in value, which means that one bitcoin is always equal in value to another bitcoin.
NFTs, on the other hand, each have a unique identifying code that exists on the blockchain and are not interchangeable. There is no guarantee that any one NFT is equal to another.
Plus, cryptocurrencies are designed to behave like physical currencies whereas the NFTs are more like physical collectables such as art.
How do you buy an NFT?
To buy an NFT, you need to find a marketplace such as OpenSea, Rarible, Mintable and Nifty Gateway. You ought to also know what type of digital wallet is required and what kind of currency you’ll need to complete the transaction. Some marketplaces will require you to pay in cryptocurrencies like ether or bitcoin, while others will accept US Dollars. Using the $ could go with a fee for converting it into crypto. Whenever there is an auction on an NFT, you will be notified to participate.
How to sell an NFT
The process of selling an NFT can vary based on the marketplace. However, you basically need to upload your asset to the marketplace, then follow the instructions to “mint” it, or turn it into an NFT. You’ll often be able to include a description of the work and suggested pricing. The marketplace will then host an auction at a set time and connect the winner of the auction with you, the creator of the NFT.