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Digital assets come in a wide variety of forms in cyberspace. One of them is NFT, which has gained popularity during the past three years among internet users. Do you have any experience with this? Or do you already have a company?
NFT is at its height of popularity, as you would surely know if you had glanced at the cryptocurrency industry a few years ago. Now that non-fungible tokens are the topic of conversation, much as Bitcoin once was, everyone is talking about them! Then, what is NFT and why is it crucial that it exists?
Today, there is a lot of false information on the internet.
NFTs are digital collectibles, according to some crypto specialists, while other publications emphasize their utility.
Correcting a mistaken belief can be a difficult task, especially if you are unfamiliar with NFT in general.
However, don’t worry, that’s what this article is for. I’ll tell you what NFT is, what the art of NFT is, and we’ll also talk about various examples of the use of NFT.
What is NFT?
Get straight to the point – what is NFT?
Alright, I’m going to give you a simple description first, and then we’ll be able to get into some of the more detailed discussion.
NFT – a non-fungible token – is a very unique cryptocurrency asset . These assets can range from digital artwork, to a song from Deadmau5 or a self-made video featuring a cat falling from a table. Once any of the above-mentioned assets ( more precisely, their metadata ) is uploaded to the blockchain, it becomes an NFT.
Now, to discuss what NFT is, the first thing we need to carefully understand is the term ” non-fungibility “.
While it may sound difficult, the term is actually quite simple to understand. Non-fungibility is a fancy way of saying ” uniqueness “. The term NFT itself stands for ” non-fungible token “. The uniqueness referred to here relates to the unique properties possessed by each NFT.
Think of this NFT as fiat currency like the United States dollar can be exchanged. This means that every US$1 can usually be replaced with another US$1 , at a 1:1 ratio. However, this is not the case in NFT .
Just like other crypto assets, NFT has its own metadata , and its existence can be identified by the blockchain in question. Unlike other digital assets, in NFT there is no conversion compared to “1: 1”-the token is completely unique , and there is only one in the world.
In fact, this is one of the reasons some non-fungible tokens have their own value . If you’re looking into what NFT is because you were stoked to learn that Beeple’s NFT art was selling for US$69 million , chances are you already know what I’m trying to say. Unlike cryptocurrencies like Bitcoin , which is completely unique and one-of-a-kind , NFT cryptos are also rare , and this scarcity is further weighed down by a certain price tag.
It’s clear that there is a reason behind the value attributed to some of the NFTs out there, and I think the previous explanations illustrate this concept perfectly enough.
I assume that some of the readers of this article will probably argue – how can a coin like Bitcoin not be unique?! All Bitcoin coin transactions are public, and each coin can be traced back, just like any other transaction that anyone can observe!
Yes you are right. However, let’s try once again using the example of the United States dollar.
Each dollar has a serial number – this applies to the metadata of every crypto coin on the blockchain. However, you can still trade one dollar for another – because the two dollars are worth it! Well, what happens in NFT is not like that, what happens is the opposite happens – there is no NFT token that is equivalent to other NFT tokens.
What is Interesting about NFT?
NFT is very popular right now – that’s pretty self-explanatory . You can prove it by reading some of the latest trends on Twitter , or checking out some local news shows .
So, what’s so interesting about all that? Studying what NFT is in detail cannot provide a clear reason why you should be interested in the topic.
Frankly speaking , non-fungible tokens allow you to become the owner of certain digital assets that can be directly verified . Once you buy NFT, everyone will know that NFT X belongs to wallet Y – it’s shown in the short description of NFT. Also, as mentioned earlier, unlike interchangeable assets, NFTs are extremely rare – this scarcity creates natural demand.
But, why do so many people want to buy rare works of art ? Or, let’s replace the question with a more general one – why would you buy a skin for your League of Legends character, or your weapon in CS:GO?
The answer is very subjective . Some people enjoy the visual aesthetic of their assets . While some others feel happy when they know that they have something rare and valuable . In addition, there are also many people who like to buy certain assets as investments , with the intention of later selling them back , and making a profit from these actions.
The same rules apply to NFT. Even though they are digital assets, they do not significantly change or affect the value they hold in any way or form.
One NFT, Two Uses?
Perhaps one of the most important points of the ” what is NFT ” discussion is the fact that most people associate NFT with digital artwork only.
It is true that the use of NFT is usually only focused on (when this article was written) the art of NFT . But, you should know that art is not the only thing!
In fact, there are a wide variety of use cases for NFT . And I don’t really think of it as a collectible – but rather as a form with real value.
To be honest, NFT can be used for a variety of purposes , although it does mostly take the form of digital art and utility tokens . The list itself can be more detailed than the one already mentioned, for example NFT could be:
- Digital art ( .png, .jpeg, .gif, and other internet-supported formats );
- Game assets ( in-game items that can be sold or traded with other players – for example Axie Infinity );
- Tickets for various events;
- Identity preservation unit;
- DeFi loan collateral;
- Tokens to get service products;
- Representations of real estate, documents, or other physical items.
Let’s go into detail, and let’s not rush . We will investigate the most famous use of NFT – digital collectible artwork.
Crypto Art – More Than It Seems
As mentioned earlier in the article on what NFT is, undoubtedly the most popular use case for this token is art collections . Let’s explore this concept further.
If you do a Google search with the keyword “ What is NFT crypto ”, chances are your search results will be bombarded with images of digital artwork. In fact, you don’t even need to search for NFT art, or try to find out what NFT art specifically is – because non-fungible token culture has always been associated with this type of art.
Artwork can be created in all possible shapes and sizes – seriously! On the one hand, you can have complex digital worlds , 3D imagery , and paintings that look like they belong in a museum. On the other hand, you can even collect photos of your dog, and turn them into NFT.
The concept of NFT art is closely related to the topic of collectibles. Most NFTs that are works of art look like collectible units – some are unique works of art, while others can be collections of similar characters ( see: CryptoPunks ), unique aspects of internet culture (like Jack Dorsey’s first tweet), or even a viral moment caught on camera , and made into an NFT-GIF (LeBron James dipping a ball during a basketball game).
In addition to the examples above, there are also other examples of NFT in the form of trading cards. Well, trading card is a card game, and at NFT there is already a booster package for your favorite card game available. However, you will not receive a physical card, but a digital card. And, you won’t be playing the game on a specific platform, but have the digital art in your collection ( though, NFT games are actually very popular too ).
Granted, everything I said earlier sounded cool, but we have almost forgotten the core aspects of NFT itself. Everyone is debating the ” irrational ” prices of some of the NFT crypto artworks, but no one has been willing to mention the contribution of NFTs in revolutionizing the professional landscape for the artists themselves.
The NFT marketplace is a medium that allows artists to truly work independently , and disengage from profit-sharing platforms. With the advent of NFT, an artist can now host their work on the NFT trading platform ( I’ll talk more about this later ), and take care of all the marketing themselves.
This is possible thanks to a combination of a certain public interest in the art of NFT, and blockchain technology itself. That is an important point that should be emphasized more often!
Actual Cases of NFT Use
You might be able to assume that you now know what NFT is, but such a statement would not be factually true because of its one-sided nature . NFT art is already the most popular topic discussed by all the media out there, but there are actually many more use cases for this token .
I’m not going to try to simplify some of the complicated jargon , I’m going to illustrate what I mean by providing an example:
Just imagine that one of your favorite musicians – for example, The Weeknd – wants to host a concert in your city. As usual, you just need to buy a conventional ticket, and go to the concert. You may be surprised to learn that there is actually an alternative ticket – the NFT ticket .
Next, let ‘s say The Weeknd decides to release a set of NFT collections – 1000’s of custom-built NFT artworks that are complemented by The Weeknd’s music tracks from his new album. Whoever buys this album will benefit indirectly – three free tickets to one of The Weeknd’s US concerts.
Well, all you need to do is prepare proof of NFT ownership when you come to the concert entrance, and you can enjoy the concert right away!
The example given above is indeed very simple , but it is sufficient to illustrate the effectiveness of NFT in real life. You not only receive a limited digital collection , but also unlock additional perks .
To be honest, this use of NFT can be expanded by hosting various meet and greet activities , VIP access to select events , locked digital content ( early access to the latest movies, special videos from your favorite YouTube creators ), and much more.
I have to admit that at the time of writing this ” What is NFT? ” article, this area of the crypto phenomenon is still not widely explored, and is only practiced by a handful of content creators (funny, The Weeknd has actually released its albums using NFT). There are several theories as to why this could happen, the most plausible one being that this NFT trading platform is still in its early stages of development.
Buy, Sell, Store, and Create NFT
By going into this section, you should have a pretty good understanding of – what is NFT, what types of NFT are out there, how do actual uses of NFT differ from fine arts based NFT, and so on.
Since we already know the basics, and given the fact that you are now a bit more knowledgeable about various aspects of NFT, we should also cover the technical part of using NFT – this can start with the manufacturing process , how to buy and trade NFT.
One thing to underline is that this article is not some kind of “handbook“. That is, I will not go into too much detail about these processes. But instead, I’ll tell you a theoretical guide only , and will also give you some surefire tips.
Making NFT – Simpler Than You Think!
What is the NFT manufacturing process, and what is the process like?
Believe it or not, how to make NFT is actually quite simple ! The current ubiquitous NFT jargon might make NFT look very confusing and complicated, I assure you – anyone who understands the basics of how crypto works can definitely create their own non-fungible token in just a few minutes.
The first thing you need to do is find an NFT trading platform . The two biggest examples of platforms are OpenSea, and Rarible. Both are dedicated to Ethereum based NFT (ERC-721 token standard).
You can also create NFT in a slightly different way, but given that you’ve just learned what NFT is, it might be a good idea to use a fairly simple method so you don’t get confused. Well, NFT creation on platforms like OpenSea is actually the preferred way to do it!
Once you have selected a platform, you will need to connect your cryptocurrency wallet to that platform . This wallet is where you store your NFT , and also a place to store your Ether for later use as a transaction tool on the NFT trading platform of your choice . Of course, there are excellent wallets that are compatible with your NFT – an example of a leading cryptocurrency wallet brand is Ledger Nano X, a hardware crypto wallet .
While it may be quite dangerous to connect your wallet to a third-party platform, make sure the process must be completely secure – this is what the trading market itself emphasizes. But, of course, security is the main reason why one should only use reliable and trusted marketplaces, as mentioned above.
With platforms like OpenSea, there are wizards that will guide you through the NFT creation process. This process is actually very fast, assuming you have your NFT ( photos, 3D files, GIFs, etc. ) set up.
Well, the only thing you might want to consider is the cost of gas. Gas fees are fees you have to pay to make transactions on Ethereum . If you are creating an ETH based token after learning what NFT is, you should try to predict a certain period of time when gas costs hit their lowest value. You can use this tool to check it.
If the cost of gas is not a big issue for you, then the NFT manufacturing process can be done very easily . You can set the auction price right away, and then determine whether or not the auction will be a private sale. Next, you’ll need to adjust a few more metrics, and you’re done – all you need to do is market your work!
NFT and Energy Consumption – A Complicated Problem
Before you create your own NFT, you should understand the issue of energy consumption which is often raised as one of the biggest criticisms of the existence of this type of token.
Several artists who have decided to publish and sell their art in NFT form have been criticized by environmentalists for this activity. It is possible that making and selling even a single NFT could require a huge amount of energy. In other words, the manufacture of NFT is very energy -intensive.
If you’re not sure about how serious this issue is, you can investigate the Tesla and Elon Musk scandal about using BTC as a payment option for the purchase of the car.
However, to do with NFT, it seems this problem is misguided . This means that this issue is not entirely the fault of non-fungible tokens – the energy waste in question occurs during the token minting process , and that is closely related to Ethereum miners , especially when combined with the popularity and use of this particular blockchain.
How to Buy/Save NFT?
If you have already learned what NFT is, and want to own some NFT, the best method is to visit one of the popular marketplaces, and start your NFT browsing process.
Depending on the reasons that prompted you to buy NFT art ( a potential investment, collectible, or otherwise ), most NFT trading platforms will have different sections for you to explore .
After finding the NFT crypto you want to earn, you will need to connect your wallet to make the NFT purchase. Some NFTs can be purchased immediately, while others must be purchased through auction for a certain period of time.
Once you have purchased an NFT of your choice, it will be stored in your cryptocurrency wallet , just like the Ledger Nano X that was nudged before. Well, the reference will also be stored in the wallet with the private key – the discussion of this private key is very complicated, so I will not discuss it in this section.
While you won’t be able to see your NFT on Ledger Live, your NFT will still be safe in your wallet. We’ll explore how Ledger works in a bit more detail in a future chapter.
Well, that’s the explanation I can give – you can already become a non-fungible token owner! Since this information is public data, everyone can know that you own a certain NFT – so not only can ownership of an NFT be proven , but it also upholds fairness and transparency!
Well, other people really won’t be able to know that YOU are the owner of a particular token – only wallets with a certain address are shown as owner information. Unless you tell ( or show ) someone that the wallet is yours, then no one will know about the ownership of the NFT.
How to Sell/Trade NFT?
If you want to learn what NFT is for crypto investment purposes, it means you will be doing a lot of trading and selling activities . While it’s still fairly simple, this process will still depend a lot on your wallet of choice.
First, let’s assume that you’re using a hardware wallet – then, we’ll move on to using our previous Ledger Nano X example.
As the previous chapter in this “What is NFT?” article pointed out, you will not be able to see your non-fungible tokens in your Ledger Live user interface. Instead, to view ( and trade, send, or sell ) NFT, you must connect your wallet to another interface that supports visual representation of the token.
You can use popular software wallets like MetaMask , or Trust Wallet . With the help of this interface, you can transact with your NFT. This access already includes activities such as sending, trading, selling, and doing other things with your NFT.
The process itself is simple . If you use a software wallet that supports NFT as your primary choice, then you don’t need to link one wallet to another – this makes the process quicker and easier.
NFT – Asset Ownership Revolution, or Time Bomb?
Before I finish, there is one more topic to consider, and that topic is part of the answer to the question – what is NFT?
That topic concerns the biggest discussion in many NFT communities – is the existence of NFT just hype and a ticking time bomb, or is NFT really a revolutionary breakthrough for digital asset ownership and the world of copyrighted material?
As you can probably imagine, this is not an easy question to answer. The answer is not easily deduced , and involves many different variables.
A frequent criticism of the art of NFT is that it is very expensive , which implies a lack of real value in every token purchase. Indeed, you do not receive physical copies of some types of artwork – you only own a representation of that art on the blockchain.
Some think that NFT is similar to a collection of trading cards, in that it is only available in digital form. This is a fairly reasonable comparison – once you know what NFT is, and what the art of NFT is, you can draw clear parallels between the two concepts. In addition, we have also discussed this subjectivity in the previous section .
Art aside, the boundaries of NFT become a bit more blurred when you start to consider GIFs and other forms of media as tradable NFT. Of course, you can buy one of Donald Trump’s tweets , but do you actually own the tweet yourself? No, you only have a visual representation of that tweet stored on the blockchain.
Do you know what NFT stands for?
No, it’s not an abbreviation for what was discussed earlier – I mean, what is the function of this non-fungible token?
Just one word – ownership.
The main point of NFT is to empower content creators and owners to be able to transact with other parties without having to go through any middleman. This allows you to retain full ownership of your assets, and transact with them at will, and even get most of the profits (less gas fees, market discounts, and so on).
In addition, there are many issues related to copyright . As you can imagine, there are plenty of scammers and bad actors out there – they don’t care what the cost of violating and stealing other people’s copyrighted content is.
While you might find out what NFT is on your own, the world’s governments are still struggling to learn it . The lack of crypto regulation also creates confusion regarding the copyright aspect of NFT.
Its use is not limited to digital artwork or concert tickets. Basically, you can tokenize everything – real estate, jewelry, cars, manual labor, and so on. The possibilities are endless!
As mentioned in the previous chapter, most of the criticism is directed at NFT’s very high price tag. This phenomenon is considered the ” Today’s Tulip Mania “, and many opponents of the NFT’s presence are waiting for its ” bubble burst “.
However, this kind of thinking simply does not take into account the tangible benefits one can receive from the existence of non-fungible tokens. Once the initial hype for NFT has died down, the prevailing general consensus within the NFT community seems likely to turn their gaze to some of the advanced use cases of this token type.
What is NFT: Summary
We have covered many aspects of NFT, as well as the arena in which these tokens operate. If you are completely new to this topic, NFT can be very confusing! To avoid this, let us summarize the main points that we have covered in this article.
What does NFT stand for, and what is NFT in general? NFT – a non-fungible token – is a unique crypto token that represents ownership of a specific asset . These assets can be anything from digital artwork and music, to physical objects and even services.
While NFT is mostly known for its role in popular culture, as collectible works of art, it also serves a much broader purpose than that . However, this goal is still considered unexplored , at least not yet reached its full potential. The popularity of NFT is supported by the hype that is highlighting the existence of NFT itself, either as a rare collectible item (CryptoPunks , CryptoKitties), or as an asset in a game.
Creating NFT can actually be done by going through a very simple process. All you need is a visual representation of the asset ( GIF, photo, image, or anything in between ), a cryptocurrency wallet , and some basic knowledge of what NFT is, and how it works.
By choosing OpenSea or Rarible ( or any other major NFT trading platform ), you can create your own NFT quickly, and without the hassle. The same is true for the process of buying a trade, or selling an NFT – the process is simpler than you might assume!
Lastly, while there are many critics out there claiming NFT to be a ticking time bomb, and that the price tags assigned to some tokens are completely unreasonable , others still believe that what is happening right now is just the beginning, and use cases for these non-fungible tokens will add up over time.
Conclusion
The crypto world is truly an unpredictable world . Every day, new trends emerge – yield farming, DeFi, cross-chain creation, and – of course – NFT.
Even though NFT was first used to market collectible art, you shouldn’t neglect NFT as it can do much more than that by itself. As time goes on, the utility and real use cases of this token will only increase – its users will discover new ways to use NFT.
Now that you know what NFT is, you can start exploring this particular part of the crypto world with the additional knowledge of NFT. Remember – if you decide to create your own token, the most recommended step for you is to use one of the major NFT trading platforms, such as OpenSea or Rarible.
Moreover, make sure to protect your funds the same way you would with any other cryptocurrency. It goes without saying that you must use the greatest wallet available in this sector; the Ledger Nano X is a superb option, but other popular wallets can also be trusted.
Who are you? Do you actually comprehend this NFT guide? Now is the moment to take action by utilizing all the resources that are already available.
