Are you curious about non-fungible tokens (NFTs)?
Your interest is understandable since an NFT artist recently sold their work for $69 million. It seems excessive, considering how NFTs are a recent development. Are they worth the money or the hype?
Understanding the concept is the first step toward determining whether this asset is worth your time. Read on as we discuss everything you need to know about NFTs.
What are Non-Fungible Tokens?
NFTs are digital assets representing real-world objects. These include art, in-game items, videos, and music. You can buy and sell them online since they are part of the cryptocurrency market.
These assets use distributed ledger technology and blockchain technology. It is one of the reasons for its increasing popularity.
Another desirable quality of NFTs is their uniqueness. They often have limited runs and come with unique identifying codes. It makes a digital scarcity—a direct contrast to the majority of digital creations.
What is the Difference Between NFTs and Cryptocurrencies?
The only similarity between these assets is their programming. For starters, both physical money and cryptocurrencies are fungible. It means you can trade or exchange for each other.
Also, these currencies possess equal value. For example, one Bitcoin has the same value as another Bitcoin. The fungibility makes it trustworthy for transactions within the blockchain network.
Meanwhile, NFTs have unique digital signatures. No one can exchange them, hence the non-fungible descriptor. A specific NFT has a different value than another, even when both are the same asset type.
How Do NFTs Work?
NFTs exist within a blockchain, a distributed public ledger recording various transactions. The majority of these assets use Ethereum.
People make NFTs from digital objects, representing both tangible and intangible items. For example, Twitter co-founder Jack Dorsey converted his first tweet to this asset. Someone bought it for $2.9 million.
To make it easier to understand, NFTs are the digital counterpart of physical collector’s items. Instead of an oil painting, you get a digital file.
You have exclusive ownership rights over your purchased NFTs since they possess unique data. This feature makes it easier to verify when transferring tokens.
What is the Purpose of NFTs?
NFTs allow artists and content creators to monetize their works. If you are an artist, you need not rely on auction houses to sell art anymore. Instead, you can sell your masterpiece directly as an NFT.
Also, you can code in royalties to get a percentage of sales whenever another person buys your NFT. This feature allows you to get more income as your artwork changes owners.
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Invest in NFTs Now
Non-fungible tokens are here to stay. It applies despite some experts saying it is a bubble poised to pop. After all, NFTs give artists a better method of earning more money for their masterpieces.
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