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What Is NFT? How do NFTs work?

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With NFTs making headline lately, some selling for millions of dollar, like Jack Dorsey the CEO of twitter who sold his first twitter tweet for 2.9 million dollar and Beeple that sold NFT for 69 million dollar.

NFTs are currently taking digital art, gaming, video and music world by storm. Bitcoin was hailed as the digital currency of the future, NFTs are now the digital art and collectible. But are NFTs worth the money – or the hype? But there are plenty of sceptics who thinks it is all a bubble that is going to burst someday. Others believes NFTs are here to stay, and that they will change investing forever.

Do you really know what NFTs are? how they work? In this guide, you’ll find out what is NFT, how do NFTs work, why NFTs is popular and where you can buy NFTs.

What is NFT?

NFT stands for “non-fungible token“. A non-fungible token is a digital assets that is stored on a public ledger, called blockchain, that certifies a digital assets to be unique and therefore not interchangeable. NFTs can be use to represent real world item such as art, gaming, video and music. 

Non-fungible is a economic term that you could use to describe things like your house, your computer, song, furniture, or a painting such as the Mona Lisa. These things are not interchangeable for other items because they have unique properties. while fungible items, on the other hand is something with unit of value and can be interchangeable – like money. For example, you can change a 100 naira note for two 50 naira notes and it will have the same value.

However, if something is non-fungible, this is impossible – it means it has unique properties so it can not be interchangeable with something else.

NTFs are typically used to buy and sell digital art and collectible. It can take the form of GIF, Games, Musics, Images of physical object and Videos.

How do NTF work?

NFTs are typically used to buy and sell digital items and are stored on Ethereum blockchain and therefore not interchangeable.

  • An NFT is created, or “minted” from digital objects that represent both tangible and intangible items with each token having a unique identifier.
  • They’re not directly interchangeable with other tokens. For example 1 ETH is exactly the same as another ETH. This isn’t the case with NFTs.
  • Each token has an ownership right.
  • The owner or creator can also store specific information inside them and this information is easily verifiable
  • NFTs tokens can be transfer between owners.
  • They live on Ethereum and can be bought and sold on any NFT marketplace.
  • NFT cannot be manipulated
  • The creator can earn royalties every time it’s sold
  • You can determine it’s scarcity.

What Are NFT Used For?

NFTs are typically used to buy and sell digital art and collectible. NFTs can take the form of Music, Video, Digital content, Physical Items, Gaming, and Collateral. Here are some information NFTs are used for.

Gaming NFTs

NFTs can also be used to represent in-game assets, such as virtual world, which are controlled by the user instead of the game developer. NFTs brings a host of benefits to the players and can provide records of ownership. Game developers have shown a lot of interest in NFTs which have attracted huge demand for unique items that are tradeable and purchasable.

NFTs allow assets to be traded on third-party marketplace with out permission from the game developer. Game developer they could earn a royalty every time an item is re-sold in the NFT market.

Music NFTs

NFTs allow musicians through the blockchain network to tokenize and publish their work. This is a great opportunity for musician to monetize and profit from their music as well as other content, the theme of the music and the artist public image.

Digital content NFTs

NFTs power a new creator economy where creators don’t hand ownership of their content over to the platforms they use to publicise it. For example, the platform where the content creator publicise it content sell ads to it followers and part of the creator profit is shared by the platform.

NFTs offer content creators a new opportunities to monetize their content. When they sell their content, funds go directly to them. In addition, content creators can program in royalties so they’ll receive a percentage if the new owner then sell the NFTs.

Physical Items

When you link real-world items with NFTs can prove ownership of physical properties in a digitize way. The tokenization of physical items is still very mush in development. But their are many projects exploring the tokenization of real estate and cars. One day you could buy a car or home as an NFT. Creating tokenized digital items of these deeds can move highly illiquid items like Car and home. 

With the development of ERC-721, your Ethereum wallet will becomes the key to your car and home – unlocking your door through cryptographic proof of ownership.

Collateral NFTs

NFTs provide such opportunities likewise. With valuable assets like car, house and land representable on Ethereum, you can use NFTs as collateral. For example, lets say you have 100 BNB and you need 1000 Tither token. you collateralize your 100 BNB and borrow the 1000 Tither. You can provide your NFTs as collateral and borrow Tither or any supported token or NFTs. If you don’t pay back your NFTs will be sold to the lender as collateral.

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Where to buy NFT

Want to buy NFTs? Here is a list of NFTs marketplaces where you can buy NFTs.

OpenSea NFT Marketplace

OpenSea is a marketplace for NFTs that operate on Ethereum blockchain. The platform hosts a variety of digital art and collectible, from gaming, virtual world items, sport, video, art, domain name and music. OpenSea is open to all, so no application or invite is need. To use the platform, you need a cryptocurrency wallet like math, trustwallet or metamask. Metamask is a crypto wallet chrome extension that allows you to connect to openSea, while Math and trustwallet is best suited for mobile phone.

Binance NFT Marketplace

As the leading crypto exchange in the world, binance has launched NFT marketplace where creator mint and sell their work of art. The Binance NFT marketplace platform allow you to trade and create non-fungible tokens. You can even mint your own non-fungible token on both Binance Smart Chain (BSC) and Ethereum. You can even transfer NFTs between the two blockchains.

Rarible Marketplace

Rarible is a non-fungible token market built on Ethereum blockchain that allows users to buy, sell and mint digital art. The platform was founded in 2020 by Alex Salnikou and Alexei Fatin. Rarible exchange is a decentralized exchange for non-fungible token that opted for community ownership and governance. The marketplace is a user-friendly platform with special categories.

Rarible connect to the Dapp using a web3 wallet, such as metamask or coinbase wallet. Once connected, browse for an NFT that you wish to bid on or purchase. Rarible native token, RARI, is used for maintaining and operating the platform.

Axie Infinity Marketplace

Axie Infinity was founded in 2018 by Sky Mavis. The  platform runs on Ethereum blockchain and is classified as non-fungible token game that allows individuals to earn from playing the game.

The platform allows users to buy, sell trade or battle digital pets called “axies”. Axie infinity is a multiple layer of tactical strategies. Players can trade axies with their AXS token, stake their token for weekly rewards and participate in governance voting.

 

 


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