NFT – NFT stands for Non-Fungible Tokens. NFTs are digital items that can be bought and sold using this blockchain technology. However, they are not fungible, making them a different type of asset, one that is based on value and popularity. They work with cryptocurrency blockchains.
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I know there might be tons of questions in your mind as to what is fungible, what is a cryptocurrency and what in god’s name is blockchain technology. Well, don’t stress, because this article will break down these terms in the most simplistic way.
Let’s begin with the topic of the hour – the massive Cryptocurrency. With the govt introducing digital money in its recent budget, the crypto is back again in the town with some new modifications. So, let’s start from the very first.
A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities. That suggests that entities can transact on their own in the absence of govt guidelines and rules.
All digital tokens so to say are made up of digital files. These digital files contain all the information about the token for any transaction. Now, they are digitally built, there are possibilities of it getting imitated or altered.
But cryptocurrencies are protected by cryptography – a tool for secure communications techniques that allow only the sender and intended recipient of a message to view its contents. Hence, it makes it impossible to counterfeit or double-spend.
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Blockchain technology is the same – it is a system of recording information that makes it impossible to change, hack or cheat. It provides a cheap and fast alternative to the official currency.
Cryptocurrencies can be mined or purchased from cryptocurrency exchanges. Not all eCommerce sites allow purchases using cryptocurrencies. In fact, cryptocurrencies, even popular ones like bitcoin, are hardly used for retail transactions. However, the skyrocketing value of cryptocurrencies has made them popular as trading instruments.
The disadvantages of cryptocurrencies include their price volatility, high energy consumption for mining activities, and use in criminal activities.
Crypto is classified into different categories like DeFi, NFT, utility tokens, store of value tokens like bitcoin and litecoin, and yield farming tokens like Aave.
So let’s now understand NFTs in detail:
NFT stands for Non-Fungible Tokens. Clearing it with an example will make it more appealing. So, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.
NFTs can be anything digital (drawings, music, even your brain being downloaded and transformed into an AI).
NFTs are intended to provide you with something unique: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork). To put it another way, anyone can buy a Monet print in terms of tangible art collecting. However, the original can only be owned by one person.
There are communities built around these NFTs. Pudgy Penguins, a collection of NFTs, is one of the most popular communities established around the tokens, but it’s not the only one. It may be argued that CryptoPunks, one of the first NFT projects, has a following, and that other animal-themed initiatives, such as the Bored Ape Yacht Club, have their own subculture.
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The communal activities, of course, are dependent on the community. It appears that owners of Pudgy Penguin or Bored Ape use Discord to vibe and share memes or complement each other on their Pudgy Penguin Twitter avatars.
All information apart, the real question is why is this NFT so important or being a trend recently?
Well, it can be answered in layers. For example, if you are an artist or a creator of something then NFTs may help you escalate your earnings. If you come up with a cool digital sticker idea, you can enable a feature in NFTs that will pay you a percentage every time the NFT is sold or transferred, ensuring that if your work becomes extremely popular and increases in value, you will reap part of the benefits.
Now, if you are a buyer, it gives you the right to use the purchased set or sticker and post it online. Plus, of course, there are bragging rights that you own the art, with a blockchain entry to back it up.
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You can also buy an NFT or more than one and as per its price in the future, it will yield you profit.
So basically anything digital can be turned into an NFT irrespective of its content. Like articles, videos, images, stickers, websites, trading cards anything…..
Michael Alvarez Cohen, director of innovation ecosystem development at the University of California, Berkeley’s intellectual-property office, wanted to try using NFTs to raise funding for the university. Allison’s key discoveries were scanned by a team of designers from legal files filed with the university, as well as handwritten notes and faxes. The Fourth Pillar is a public work of art that may be viewed online, and the team has created an NFT to claim ownership of it.
But it’s not all revolutionary as it seems. To prevent data corruption, blockchains rely on energy-intensive computational crunching. Ethereum, for example, consumes almost the same amount of energy as the entire country of Zimbabwe.
What is the future, you say…
Not to doubt that it’s huge as everything is going digital these days. The current gen has already started using or learning about this NFT like Marvel and Wayne Gretzky launch their own NFTs, which seem to be aimed at more traditional collectors, rather than crypto-enthusiasts. It still hasn’t gone mainstream but the reach is definitely increasing.
Several marketplaces have sprung up around NFTs, allowing users to buy and sell them. OpenSea, Rarible, and Grimes’ pick, Nifty Gateway, are among them, but there are dozens more. All the NFTs are stored in a digital wallet.
Hence, believe it or not, NFTs are going to be a big game in coming years with lots of opportunities for buyers and sellers in literal terms. It is advisable to get acquainted with it as soon as possible.