For starters, it isn’t just crypto art, but we’ll get there. Because the term has become overused, the entire world is perplexed about what an NFT is. A Google search reveals that it is a ‘non-fungible token,’ but that doesn’t make it any clearer. So, read on to fully understand what’s happening in the crypto ecosystem with these well-known tokens called NFTs.
The Ethereum Network as The Foundation; The Market as a Business Opportunity
Let us begin with the network that is currently operational. NFTs are a component of the well-known Ethereum Network. And as you’re probably aware, Ethereum is a cryptocurrency similar to Bitcoin. Only its blockchain also supports NFTs — non-fungible tokens that can store additional information, allowing them to function differently than ETH coins. Until now, some other blockchains have implemented their versions of NFTs, and the revolution is still taking place.
Now for the math. The equation for NFTs is that it can be almost anything digital, such as jpg, music, drawings, or your skeleton, that is downloaded and converted into artificial intelligence. However, the market’s most robust drive is related to business, so the buzz about NFTs is mainly about using blockchain technology to sell digital art.
What Is the Difference Between an NFT and Cryptocurrency?
Consider Dogecoin. It’s not a non-financial transaction. However, a specific GIF of a Dogecoin would be. We can now use the logic of the algorithms to learn more about NFTs. Non-fungible tokens are generally created using the same programming as cryptocurrencies, such as Ethereum or Bitcoin, but that’s where the similarities end.
Cryptocurrencies are “fungible” money. Meaning that they can be traded or exchanged for one another, but that’s not all because their values are also equal. For example, one dollar is always worth — another dollar. And one Bitcoin is always equivalent to — another BTC. A trusted method for performing transactions on the blockchain network is established due to something known as “crypto fungibility.”
NFTs are very different, and each has a digital signature that prevents them from being exchanged for or equal to one another. That is why we call it non-fungible. As a result, NFT may resell for less than you paid for it, or an owner may be unable to resell it if no one wants it. Because NFT is ‘nonfungible,’ its value is solely determined by what someone else is willing to pay for it. However, its one-of-a-kindness is also its main strength.
How to Make and Use NFTs?
As we previously discussed, NFTs are generally held on the Ethereum blockchain network, though other smaller blockchains also support them. The process of creating is commonly referred to as minting. An NFT is created by combining digital objects that represent tangible and intangible items, such as graphic art, GIFs, videos and sports highlights, collectibles, virtual avatars, video game skins, designer sneakers, music, and even tweets.
To be more specific, NFTs are digital versions of physical collector’s items. For example, buyers receive a digital file instead of receiving an actual oil painting that they can hang on their wall. But also exclusive ownership rights! Of course, NFTs can only have one owner at a time, which is why blockchain technology is so important in this context — it makes it simple to transfer tokens between owners and verify ownership. Furthermore, the creator can now store specific information in an NFTs metadata after the minting process. Artists, for example, can sign their work by including their signing in the record.
With all these aspects, it is clear that a unique opportunity is there for content creators and artists to monetize their wares. Blockchain technology and NFTs make it possible.
To be more specific, artists no longer have to rely on auction houses or galleries to sell their works of art or collections. They can now sell it directly to the consumer as an NFT, allowing them to keep more of the profits. Furthermore, artists can program royalties to receive a percentage of sales whenever their artwork is sold to a new owner. This is an appealing feature because most artists do not receive future proceeds after selling their work.
Don’t put it off any longer; Join the NFT craze yourself and continue reading our articles!
