NFTs – Everything You Need To Know About Non-Fungible Token (NFT)

Seeing celebrities and individuals earning crazy money from NFTs (Non-Fungible Tokens), everyone wants to jump on the NFT bandwagon. Some critics like to indicate flaws in the NFT ecosystem and call this a bubble waiting to burst.

Others compare it to the dot-com and housing crisis. When some apes make millions of dollars, it does ask us to question what value truly is. With NFTs being visible almost everywhere, in football and basketball halftime ads, movies, music and television, and even clothes, NFTs are the next big thing.

Who Started NFTs And When? Where Are They Now?

Kevin McCoy created “Quantum,” the first-ever NFT on Namecoin, in 2014. Over the ensuing years, several additional NFTs were introduced on blockchains that were not Ethereum. For instance, Spells of Genesis, the first blockchain game, debuted in 2015.

The first crypto art market was launched in 2016 with the release of Rare Pepes. These initiatives, however, fell short of achieving universal acclaim. Except for people who were knowledgeable about cryptocurrencies and blockchain technologies, they remained mostly unknown.

NFTs only started to become more popular with regular consumers in 2017. The first NFT collections were introduced around this time on the Ethereum network. Previous blockchains made ownership transfer and trading incredibly challenging. The creation, coding, and storing of tokens were made possible by the Ethereum network and its smart contracts capability. The onboarding process was made simpler, and access was expanded by these new features.

CryptoPunks, a collection started by Larva Labs that has come to be associated with early NFT history, was one of the first Ethereum initiatives.

What Is An NFT? What Does NFT Stand For?

What is Non Fungible Token?

NFT stands for Non-fungible Token. They are digital assets in the form of artwork, videos, GIFs, music, photos, tickets to events, memes, and even video games, which are non-exchangeable and unique to the owner.

They can be downloaded, screenshotted, and copied over the internet. But they can’t be replicated. The ownership they provide differentiates them from every other image on Web2.

NFTs have a listing (minting) that indicates their originality and is also shown on the Blockchain with the owner’s name. They are valuable to artists as they pay dividends in percentages to the original creators on every re-sell. An artist never had such control over his art before.

These intangible assets include plots of virtual real estate in games like The Sandbox, digital artwork like Beeple’s Everyday – The 2020 collection, and even images of cartoon apes and flying cats.

Artists and Designers can now track their artworks and stray away from scams in offline marketplaces. Another key factor is the indestructibility of NFTs. Offline Art pieces can be torn, ruined, burnt, stolen, or even lost. Not the same with NFTs. They are always traced back to the owner and the original creator.

NFTs are tradeable asset that says that the wallet address owner is the owner of a digital file stored in a digital location. Cryptography secures this process. This means they are incredibly secure and nearly impossible to counterfeit or double-spend. It would make no difference if you exchanged a bitcoin for another bitcoin. But an NFT is one-of-a-kind.

Fundamentally you can exchange NFTs (Buying and Selling) but not necessarily exchange with another NFT, even if they are copies. If an NFT has thousands of copies, it would still be unique to all thousands of users. But the first one to be minted would be much more expensive than the later mints. Each token has its Metadata which tells the owner they have a copy number #. Typically, artists decrease the number of copies, features, and varying degrees of rarity to pump up prices and demand for the NFT.

For example, the BAYC or Bored Apes Yacht Club has the rarest Bored Ape, BAYC #7495, known for traits such as the dagger in its mouth, a cyborg eye, and Dmt fur. Only 49 apes have a dagger in the mouth, while only 219 apes feature Dmt fur. This ape is listed for over $100,000. Exchanging an NFT is like giving Charizard over for Squirtle. Or even giving a Charizard for a less-valuable Charizard.

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How Do NFTs Work?

We must first comprehend the Blockchain to grasp how NFTs operate. As explained, a blockchain is more than a digital ledgerโ€”a public record that records information, typically transactions. The Ethereum Blockchain serves as the primary repository for NFTs. Other blockchains used to lower “Gas Fees” also store NFTs.

A blockchain is a distributed database that resides over a global network of computers, unlike an Excel spreadsheet or a large filing cabinet. It is, therefore, decentralized and unchangeable.

Since the Blockchain is a public ledger, it is the perfect framework for digital assets like cryptocurrencies or NFTs that require ownership evidence. On the Ethereum blockchain, most NFTs rely.

What Gives NFTs Value?

The biggest reason for the NFT boom is the fear of missing out, a.k.a FOMO. NFTs are the next big thing. Celebrities, Entrepreneurs, Athletes, Sports Companies, Musicians, Artists, and even Politicians are involved in some way or the other in NFTs.

Another factor is their availability. Different features, Custom Outfits, Rare Items, and everything can create scarcity, further increasing value. Not to forget the technical backing that the Blockchain provides to NFTs, giving identity and ownership of an asset.

Why Are NFTs Important?

NFTs are important for a multitude of reasons. First, they give undue respect and recognition to artists all across the globe. Anyone can become an NFT millionaire if they are worth it. It gives a platform to the unfortunate and even pays them on every Re-Sell.

Second, NFTs are an asset class with names and addresses. They cannot be counterfeited and cannot be used in any form of media without the owner’s permission.

What’s The Use Of NFT?

NFTs can be used for: – Video Game Tokens, loyalty points or rewards, Concert Tickets, Corporate Discounts, Vouchers, digital collectables, Art, Music, Videos, utility tokens, Video Games, Real Estate, Memes, and, surprisingly, Tweet Screenshots.

How Are NFTs Different From Cryptocurrencies?

Cryptocurrencies and NFTs both use the Cryptography of the Blockchain they work on. That’s the only thing similar between them. Cash and Crypto Coins are fungible. They can be taken for something else or traded. Their values are identical. Dollar for dollar. One Ether for one Ether. NFTs are different.

Each has a digital sign that makes it difficult for NFTs to be replaced or exchanged for another. For example, an NFT of the same source having two copies still has a different value (because of availability). What also differentiates crypto from NFTs is the sheer quantity of them.

Anyone can buy a famous cryptocurrency. But not everyone can buy a trending NFT. Not because of the only choice but because Ethereum is a well-liked cryptocurrency. As a result, paying for an NFT typically requires ETH. Digital things, including fine art, animated gifs, videos of sporting events, virtual avatars and video game skins, designer shoes, and even music, are used to generate NFTs.

Additionally, they receive sole ownership rights. Because NFTs employ blockchain technology, verifying ownership and transferring tokens between owners is simple. NFTs can only have one owner at a time. The Metadata of an NFT might also contain specific data stored by the inventor. Artists, for example, can sign their works of art by entering their signatures in the file.

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Most Expensive NFTs and Their Originations

The Merge NFT

Sold in late 2021, The Merge, made by Pak, is a series of NFTs sold for $91.8 Million, surpassing the most valuable artist ever, Jeff Koon, and his painting “The Rabbit”, which sold for $91 Million in 1986.

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Clock

what's an nft

Sold in the February of 2022, Clock is a joint project by Julain Assange, co-founder of WikiLeaks, and Pak, the creator of the most expensive NFT, The Merge. It was an NFT created to support Assange, who is behind bars on accusations of espionage against the US.

CryptoPunk #5822

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There are a lot of NFT collections out there, but none match up to the hype that CryptoPunks have. Launched by Larva Labs in 2017, CryptoPunk #5822 sold for nearly $23.7 Million in February 2022 in the collection of rare alien punks, 9 out of 10,000. To have a bandana is also the punk out of 333 in 10,000.

Alien Cryptopunk #7523

how much does it cost to mint an nft

This punk is among the rare alien punks, 9 out of 10,000. It has an Earring, Knitted Cap, and a Medical Mask. This punk, “Covid Alien”, was bought by Shalom Mckenzie for $11.75 Million. Numbers 7, 8, 9, and 10 are all CryptoPunks ranging from $10.5 to $7.6 Million.

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What Is Non Fungible Token

Artwork by Edward Snowden sold for $5 million in April. CryptoPunk #7523 sold for $11 million in June. Right-click and Save As Guy by XCopy sold for $7 million in December.

The First 5000 Days

what is an nft

Sold in March of 2021 at Christie’s digital art auction, Everyday: The first 5000 days, was a digital art piece sold for $69.3 Million by an artist called “Beeple”. It was a collage of 5000 pictures, made one every day for the last 13 years by Mike Winkelmann.

How And Why To Buy NFTs?

You can start your NFT journey by first creating a Crypto Wallet. Then add Cryptocurrencies to that wallet (most preferably Ether), and link it to an NFT Marketplace (like OpenSea, Rarible, etc.). Now you can browse and search for NFTs. You can create a free wallet on Metamask, add Coins from Binance or Coinbase, and browse NFTs on OpenSea or Rarible NFT Marketplace.

Ben Yu is an entrepreneur, crypto-expert, and former Harvard student. He says that “NFTs are risky because their future is uncertain, and we don’t yet have a lot of history to judge their performance. Since NFTs are so new, it may be worth investing small amounts in trying it out for now.” That sums up why you should invest in NFTs.

Customer sentiments run this marketplace. NFTs have value only if there is a demand for them. Technical and Fundamental analysis fails on these lands. If you are considering investing some extra cash somewhere and have a risk appetite, then NFTs are the correct space.

Should You Jump On The NFT Scam/Success?

It depends. But think twice, do proper research and then take any action. Keep the pros and cons in mind, and know your finances, risk appetite, and the volatility this space brings. NFTs are relatively new if you look outside the box. If they will burst like dotcom bubble or crypto crash, it’ll be hard for you. Before you start investing in NFTs, please do watch this video on problems with NFTs.

Popular Questions And Answers (FAQs) On NFTs

What Does NFT Stand For?

NFT or NFTs stand for Non Fungible Token/Non-Fungible Tokens

What Makes An NFT Valuable?

NFTs are considered valuable because it verifies the authenticity of a non-fungible asset. It gives the individual ownership of an asset, where only one person can have NFT at a time.

How To Get Started With NFT?

Make a wallet, connect to the marketplace, browse, buy, and sell NFTs.

How Much Does It Cost to Create An NFT?

The minimum cost to create an NFT ranges from Free to $0.1 to $150. It depends on lots of factors like cost of selecting blockchain, minting fee and marketplace fee. The fee changes based on various platforms.

How To Create NFT For Free?

You can do that by choosing the Polygon Blockchain while minting your NFT on OpenSea.

Is Minting An NFT The Same As Buying?

No, minting and NFT is not same as buying an NFT. If an NFT is first minted, then only it can be sold.

What Is Minting NFT?

In simple terms or layman’s terms, Minting an NFT means you undergo several processes to create an NFT (like creating digital stuff on your own and listing it on the marketplace). You can convert some art pieces, memes, and video clips into NFT. On the contrary, NFT is about purchasing existing NFT from any seller; nothing new is created here.

How Much Does It Cost To Mint An NFT?

The average cost to mint an NFT is $365.98. This cost includes both the cost of minting an NFT, which is $249.67 and the average price of the gas fee, which is $ 116.31. The minting cost of an NFT is fixed, but gas fees can change during off periods and when market values are high or low.

Where To Buy NFT?

You can buy NFTs from various NFT Marketplaces. Some of the best marketplace are OpenSea, Rarible, Super Rare, NBA Top Shot Marketplace, Nifty Gateway, Axie Marketplace, etc.

How To Invest In NFT?

You can start investing in NFT by following this simple three steps. Open an account at a suitable marketplace like OpenSea, Rarible, etc. Second, Create your digital wallet to store your NFT. Third, Buy NFTs (or Invest in NFT).

How To Purchase And Sell NFT?

You can do both buying and selling of NFTs at NFT marketplaces according to your ask and bid prices.

How To Make Money From NFT?

There are several ways you can make money from NFT. The best ways to make money with NFTs are: Create and Sell NFTs, Trade NFTs, NFT royalties, Play To Earn NFT Games.

What Are NFT Stocks?

NFTs are digital assets, not stocks of companies like the stock market. However, there are stocks of companies that list NFTs, like Coinbase.

Why Are NFTs So Expensive?

The uniqueness of something make goes high regarding its price and value. This is the same for NFT. Getting ownership of digital art is something unique, making people pay a high price for the NFT. They pay such a high price for ownership, not only for the asset.

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