Ever thought of owning the rights to a digital painting, an exclusive song, a famous GIF, a celebrities’ self-portrait or your favourite cricket stars’ personal videos? NFTs make all this possible. NFTs are a method for artists and celebrities to create verifiable digital and physical assets. These assets can be sold directly to fans, investors and collectors across the world.
Some trending digital items being traded as NFTs include art, GIFs, videos and sports highlights, collectibles, virtual avatars, and video game skins, designer sneakers, and music.
What is an NFT?
NFTs / non-fungible tokens are authentication tokens, stored on a blockchain. They represent digital or physical assets such as art, music, in-game items, videos etc. NFTs are created by artists, content-creators and celebrities. These individuals create a unique token associated with an asset and sell it on NFT trading platforms. The buyer of these NFTs can keep them as a prized collectible or can re-sell the NFTs to other people.
These digital assets have been around since 2014. However, they have gained popularity only recently as a means of buying and selling digital artwork.
What are NFTs used for?
For artists, content-creators and celebrities, it is an opportunity to monetize their wares or exclusive assets on a platform that functions like a digital gallery or auction house. For fans, collectors and investors, it is an opportunity to directly access valuable collectibles from the comfort of their homes, with the assurance that they are purchasing authentic assets.
What is the value of NFTs?
Determining the value of a non-fungible token is very similar to how you would value a sneaker, signed comic book, a painting or any other collectible. The guarantee of exclusivity and authenticity, along with the fan-following of the creator, determine the value of NFTs. The buyers and sellers consider these factors to value NFTs. The final transaction price is established through an auction on an NFT platform.
How to buy NFTs?
Once you have decided that you want to start your NFT collection, you can access a trading platform that forms a medium for buying and selling NFTs. On the platform, you can bid for the NFTs you want, and also re-sell them later on the same platform.
NFT v/s Cryptocurrency?
NFTs and Cryptocurrencies are built using the same concept of blockchain-based transactions. A blockchain network holds ledger of all transactions of NFTs and cryptocurrencies trading on that network.
However, NFTs, as the name suggests, are ‘non-fungible’. Physical money and cryptocurrencies are fungible because they can be exchanged for one-another. One dollar is worth another dollar or one Bitcoin is worth one Bitcoin. It doesn’t matter what dollar you have, as long as it’s one dollar. NFTs, however, are not interchangeable. The NFT of one digital painting cannot be exactly equal to the NFT of another digital painting. Each NFT has an underlying asset associated with it, making it ‘non-fungible’ and increasing its exclusivity.
Conclusion
NFTs are revolutionising how we own art and collectibles. In the future, every digital asset could have its own NFT and each person, across the globe, could own and trade these assets. NFTs can usher a new-age of creativity, with quick transactions, safety from counterfeits and large market-access for NFT creators.
