A new, veritable digital marketplace is popping up on the web, and NFTs are the leading players of this period, but what are NTFs? How do they work? And most importantly: why invest in them?
Let’s find out together about this new world, which from its inception in 2015 to today represents a multimillion-dollar market.
Before we start talking about NFTs, let’s see what we will cover in this article:
What are NFTs?
If you have heard about this specific cryptographic token, it is normal that you are wondering in detail: what are NTFs?
Let’s start with the NFT definition. This is short for non-fungible-tokens and is essentially a digital asset that is nonreproducible, nonsubstitutable and therefore unique.
Each work can have one or more revisits and in fact can consist of: gifs, jpeg images, personally taken photographs of objects or landscapes, graphics, videos and even audio.
The principle behind NTFs is that of having a unique code. This allows the object to possess an originality that gives it a broad economic value.
But what are NFTs? Let’s say that initially non-fungible tokens were mainly related to the art world. But in reality NFTs are employed in many fields, the main ones being:
collectibles
gaming
metaverse
sports
utilities
Although there may be multiple revisits of the same one, each NFT has its own identity and possesses an asset that cannot be exchanged or replaced with another asset.
In fact, the purchase of a work tied to a non-fungible token does not involve the acquisition of the work in a tangible sense, but one has the option of proving a right to it through the smart contract.
Simply put, they are non-tangible works that can only be found on the Internet and therefore cannot be physically owned, but are guaranteed to be original and unique.
Thus, NFTs are a type of cryptographic token with uniqueness and legitimacy value verified by the blockchain, a technology that stores all data related to the transactions and ownership of the token and cannot be changed or removed.
And it is precisely because of the blockchain that owners of NFTs can obtain certification of ownership.
Specifically, there are two types of NFT contracts:
ERC721 → A contract that manages only 1 token
ERC1155 → A contract that manages N tokens that still retain their originality
How do NFTs work?
NTFs: how do they work? When the buyer obtains the token, he or she is paying for his or her ownership right to the work, and this information is safeguarded by smart contracts, which are protocols that facilitate and enforce the negotiation of these works.
Being a digital token, an NFT is nothing more than a sequence of numbers that is compressed into another shorter sequence called a hash; this process, called hashing, contains all the information of the NFT (sales, transactions, owners…) and is stored on the blockchain.
Where to buy and sell NFT?
One question many people ask is: where to buy NFTs? There are many marketplaces on the market that allow the sale and purchase of NFTs, such as OpenSea, Rarible, SuperRare, and Foundation.
Each marketplace has its own rules on buying and selling NFTs. For example, to sell these tokens on the Etherum network (decentralized virtual computer, the purpose of which is to develop and manage smart contracts) through OpenSea, you have to pay a fee called: Gas Fee.
In addition, in order to buy NFT, it is necessary to own a cryptocurrency wallet, which can be Metamask. The cryptocurrency to be used depends on the relevant marketplace, for example on OpenSea, one has to buy Ether cryptocurrencies, whose value right now is about $3,300 each Ether.
Having reached this point, the question arises: Why should I buy an NFT if it is only virtual?
Why buy NFTs?
Does buying NFT pay off? It must be emphasized that What attracts buyers or collectors to this world is that digital gives the owner a sense of elitism about the work, as he or she owns a unique and limited asset that cannot be copied in any way.
Moreover, since ancient times, societies have grown and evolved following materialistic thinking. To own something means to have it physically: to have it in the home or office.
Following this philosophy, humans are inclined to place a significant value on an object, concerning its usefulness or worth, which is derived from their own experience. The more the value of the object is reputed to be high, the more man is willing to pay for its certified ownership.
Would you buy an NFT if I told you you could make money on it in two weeks?
This is all very interesting, but is this a market that has a long-term future or is it just a trend of the moment?
NFT: Trend or future reality?
This is a very interesting question that you, too, have surely asked yourself and tried to give an answer to, albeit one of dubious certainty. No one possesses a magic sphere, but there are already many millionaire entrepreneurs who have invested and, still are investing in the NFT market.
In your opinion, does this mean anything?
Moreover, the NFT blockchain has already started its path of worldwide revolution for several years and, little by little, it will be adopted by everyone en masse. What will make the real difference in this market will be the demand toward certain works: the more a work wants to be owned by more buyers, the more the value of an NFT will increase.
And what do you think? Are you ready to invest in NFTs?
Always remember that we live in a digital marketplace, where everything changes very quickly and there are always new opportunities around the corner, but it’s good to know how to seize them!
Keeping up in this world is often difficult and the responsibility for one’s choices is heavy, especially financially. The most cherished advice I can give you is to study, keep up to date and understand well what you are doing. I created this blog for this very reason, to give you the appropriate knowledge about this world. My goal is to advise you and help you make more thoughtful decisions.
If I have intrigued you with these concepts you can take a tour of my Blog to find others that might interest you!