NFTs: Know Why Minters Love Buying Non-fungible Tokens
NFTs (Non-Fungible Tokens) explained and why are people paying insane amounts of money to buy these?
Amitabh Bachchan is on it, Salman Khan has announced it, Bollywood is fast getting on ‘NFT’! A word that is all the rage now. The talk of the Digital universe (read Multiverse) for some and an enigma for many others. Regardless of what it is to you, it is a term that you definitely must have stumbled across or heard of in the past few months, unless you were living under a literal rock. So what are NFTs that everyone’s talking about? Well buckle up and please read on and decide if this is another Gold rush like the Cryptos or it’s the future and here to stay!
What exactly are NFT’s:
The term NFT stands for a Non-Fungible Token. Non-fungible, in this context, means that it’s unique and (literally) irreplaceable. The ‘NF’ in NFT stands for non-fungible, meaning the item is non-replaceable as the item is unique and that there are one-of-a-kind goods. The ‘T’ in NFT stands for token and describes the ownership of the item; think of this as a digital signature or an imprint certifying you are the rightful owner. This digital signature/certificate is stored on a distributed database known as the blockchain. Blockchain in simple words is a digital ledger or a diary where you can note the ownership of digital assets. In order to prove that you’re the owner of your house, you need to show the legal documents. Think of Blockchain in a similar manner.
NFTs vs Crypto:
While it’s true they’ve been knocking around since 2014 they didn’t hit the mainstream until early 2021, with many high-profile and unexpected collaborators wanting a slice of the crypto pie. Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value—one currency is always worth another currency in its original form or an equivalent form just as one Bitcoin is of the same value as another Bitcoin. NFTs exist on a blockchain, which is a distributed public ledger that records transactions. Since NFTs are considered digital assets and numerous people want a specific token, the demand often causes the asset to rise in price. This results in the reselling and purchasing of digital goods at prices much higher than they were originally sold for.
Category of NFT Trades:
An NFT is created from digital objects such as photos, videos, content, and combinations of them. The process of creating an NFT is called minting and once an NFT is created, it’s called minting. Some of the examples of NFTs are art, images, videos, copy of tweets, collectibles, sports cards, sports highlights, and music. To give a recent example of the NFT trade, a digital artist from South Carolina viz. Mike Winkelmann, a.k.a Beeple, sold a tokenized collage of his art – “Everydays: The First 5000 Days” for an unbelievable amount of $69 million at an online auction as an NFT.
The need for NFT’s:
So why are NFT’s so much needed since any NFT asset you can simply search and download from the Internet? The answer lies in the entire ownership aspect. NFTs aren’t trying to solve the issue of somebody getting a peek at your digital art. but the reason for NFT’s is to mainly establish ownership of that asset. To give an example, art forms can be easily copied and reproduced. But still many spend millions to buy original Artwork etc. So your asset is only worth and is of value when there is 100% credibility about its owner.
How to trade in NFT’s:
Your first step is to create a digital wallet where you’ll securely store the cryptocurrency that is used to buy, sell, and create NFTs. The wallet also allows you to safely sign in and create accounts on NFT marketplaces. Some of the popular ones include KnownOrigin, Rarible and OpenSea. Google these names and you will find tons of videos teaching you step by step how to onboard these. Bear in mind that in India, there have been comments from the RBI and the government, and there is a framework being contemplated for cryptocurrencies or digital currencies. So as yet there is not much clarity for the legal framework but it’s bound to happen soon.
Should you really care about NFT’s:
As unimaginable amounts of real and digital world currencies are traded for NFTs, experts say, NFTs will soon expand beyond trading art, music, video clips, memes, etc. One startup lets people use their NFTs as collateral for loans. The rise in popularity of NFT art is only the beginning of how these assets can fully redefine exclusivity and ownership across industries in a world headed toward digitalization. The fact that everybody was stuck at home and fully digital further magnified people’s focus on digital developments and specifically crypto and NFTs. As a result, this technology and these currencies, which have existed for years, have gotten further magnified.
Future of NFT’s:
The sheer advantages that NFTs have bestowed on users, creators, investors, inventors, entertainers, artists, and more are endless. Cross-Block-chain interoperability is the next big thing in the current unstructured decentralized ecosystem we see today, as it will reduce the monopoly effect and allow artists/innovators/originals to leverage the strengths of the digital world to create opportunities for trade benefit. As the new post-pandemic real world emerges there is the new digital world of NFTs that’s opening up an infinite number of opportunities, and it’s more than likely to continue emerging as an exciting asset class for years to come. NFTs will most surely participate in redefining the concept of digital ownership, jump on board, the time is now!
About the Author: Sameer Mahuli is a digital transformation specialist and has been developing digital strategic roadmaps for Brands, Celebrities & Newsmakers.
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