Non-fungible tokens, also known as an NFT, are very common and continuing to become more influential in our daily lives. NFTs are a form of a digital asset that are selling for large amounts of money in some cases. The concept of understanding an NFT can be frustrating, confusing, and challenging. We’re going to explore a few of the ways to make it easier to understand an NFT, so that you can have a better set of knowledge surrounding these unique digital assets.
So, now that you know that an NFT is a digital asset with a certain amount of value, how are they bought and sold? The method of sale generally takes place online and can be compared to the transaction of a type of cryptocurrency. Selling and buying cryptocurrency is very similar to buying and selling a non-fungible token (NFT).
Let’s take a look at some of the different ways that you can buy an NFT, and some of the different reasons that NFTs have become so popular over the last eight years. We will start by taking a look at the NFT artwork industry to talk about how content creators and collectors have benefited from building their own NFT collection.
NFT Artwork
NFTs started becoming popular in 2014 and that process has only gotten faster and faster over the last decade. One concept that you may have heard about is NFT artwork. NFTs are used for digital artwork because it makes the process of buying and selling very secure. This billion dollar industry takes advantage of this special technology with the hopes of continuing to grow and innovate.
At least for now, there’s so sign of this slowing down any time soon. The NFT digital artwork industry continues to expand rapidly, allowing for more and more digital artwork transactions to take place in partnership with this advanced blockchain technology.
If digital artwork can oftentimes be copied or viewed online, why would people be so willing to buy digital art through an NFT? One reason is because collectors often prefer to have proof of ownership of the original source of the digital artwork creation. This is one of the reasons that an NFT representing a collection of digital artwork might sell for millions to a collector, while other people would simply prefer to view it online for free or much cheaper.
What Does NFT Stand For?
As mentioned in the introduction, an NFT generally is short for ‘non-fungible token.’ What exactly is a non-fungible token? This is a cryptographic asset that cannot be traded or exchanged like a traditional cryptocurrency.
For example, a cryptocurrency coin like Bitcoin is a fungible token. Every bitcoin is identical to each other, while every non-fungible token asset doesn’t necessarily have to be identical. This is one of the primary ways that an NFT is different from a cryptocurrency like Bitcoin.
Here’s another way to understand this complex concept. Bitcoins cannot represent a materialistic item in the real world. Cryptocurrency in general cannot do this, but it can determine the value for a materialistic item in the real world. An NFT on the other hand can represent a materialistic item, including assets such as digital artwork.
NFTs can help reduce fraud during transactions for these materialistic assets and make the entire process more transparent and secure. The exclusivity of an NFT is an important part of its purpose and definition. This means that any NFT cannot be replicated or copied on the blockchain. They are unique and every single NFT is generally unique, unlike cryptocurrency. Does this mean that every NFT is one a kind? Yes, generally they are one of a kind. NFTs are not unlimited in supply either, unlike many other digital assets, including cryptocurrency.
How Does NFT Technology Work?
You are probably realizing by now that NFT blockchain technology is very complicated and can easily be confusing for the average person. This is understandable, given the extensive nature of the NFT process and the types of things that non-fungible tokens are used for.
When an NFT is created, a digital version of some sort of materialistic item is generally being created. This can include digital assets like artwork, music, sounds, videos, or collector’s items from certain types of software, including video games.
Once the NFT is created, a single owner is determined. The blockchain can easily track and publish the current owner of the NFT. In addition, each NFT has its own special information in the form of metadata, which can help to verify the NFT and makes everything a whole lot more convenient.
NFT technology is used in such a way that takes advantage of the digital imagination that the internet has gifted millions of people around the world. This advanced technology is so valuable, that it has already grown into a billion dollar industry since NFTs became a reality in 2014.
Content creators, especially for digital artwork, are the people that have benefited the most from the NFT popularity explosion in recent years. NFTs empower these content creators to find new ways to generate revenue and monetize their special digital artwork creations.
Whenever a digital artwork NFT is sold or exchanged, artists can even claim fees or royalty payments as a part of the NFT’s original programming. This is an exceptional way to sell digital artwork and the ways to monetize their work doesn’t stop there.
The next topic that we’re going to cover is the process of purchasing or acquiring an NFT that is available online. While the process of purchasing an NFT isn’t super complicated, it can certainly be tricky for someone who is just starting out and doesn’t fully understand blockchain technology or the ways to acquire cryptocurrency to pay for it.
How Do You Buy NFTs Online?
A digital wallet is a major requirement if you plan to start buying non-fungible tokens (NFTs) online. Most NFT market providers require you to own a certain type of cryptocurrency to purchase a specific NFT.
Once you have a digital wallet ready to hold cryptocurrency, you’ll likely need to acquire the specific currency that the NFT provider accepts. This is commonly Ethereum, but other cryptocurrencies can sometimes be supported, including Bitcoin.
In order to purchase Ethereum, you need to sign-up and create an account on a cryptocurrency exchange. You can then use a variety of payment methods to purchase your currency. Once your account is verified and you’ve acquired the currency, simply transfer it to your digital wallet and you’re pretty much ready to buy an NFT. It is most likely in your best interest to purchase cryptocurrency through an exchange that has lower fees for transactions.
You should then do some research to try and find the best NFT marketplace that you’re comfortable with using. Here’s a short list of the best NFT marketplaces that you should strongly consider using while trying to buy NFTs online in 2022.
Best NFT Marketplaces to Buy NFTs in 2022
- OpenSea
- Foundation
- Rarible
- Crypto.com
- Nifty
- Crypto Punks
- SuperRare
- Axie
- Mintable
Each of the NFT providers and marketplaces listed above has its own pros and cons. Some of them are extremely popular, while others may only be used for specific reasons. The good news is that nearly all of them accept digital wallets with the appropriate cryptocurrency, primarily Ethereum.
Different types of NFTs will likely be available on each marketplace, so you should sign-up for the type of NFT market that has the types of NFTs that you desire to purchase. Conducting your own research about each marketplace will likely help you make the best decision when signing up and selecting an NFT provider.
Buying an NFT means that you’ll be acquiring a unique digital asset that you will be the exclusive owner of. Some NFTs are extremely affordable, while some collectors have also raised the price of a desired NFT to millions of dollars. There are digital artworks that have sold as an NFT in 2022 for multiple millions of dollars in a single transaction.
Most Popular NFTs
You might be wondering about some of the best NFTs and most popular NFTs that have been created. We will take a look at a short list of a couple of the most well-known NFTs that currently exist.
Bored Ape Yacht Club
The Bored Ape Yacht Club is a very popular NFT collection that currently rests on the blockchain for Ethereum. The interesting thing about this particular collection is that the NFTs are auto-generated images of pixelated monkeys and apes. The collection includes about 10,000 of these pixelated monkey pictures and is currently one of the well-known NFT collections.
Doodles
Similar to the Bored Ape Yacht Club, the Doodles NFT collection also includes 10,000 images of cartoons. It goes to show how popular this type of NFT collection can be, especially when the content creator uses something so random that it resembles with the public world of collectors that find interest in this type of content.
Is It Safe and Secure to Buy NFTs in 2022?
One of the first topics that comes up when discussing NFTs with a newcomer is the concept of security. NFTs can be the target of a cyber attack, but it’s very rare. Blockchain technology is generally very safe, transparent, and secure, but that doesn’t mean that it cannot be compromised by a cyber attack.
There have been many cryptocurrency cyber attacks and the same can be said for NFTs. If you’re purchasing an NFT that doesn’t cost millions of dollars, then you’re probably not going to have anything to worry about. Cyber attackers target NFTs that are worth a lot of money, so if you’re buying an NFT that isn’t worth a whole lot, this security vulnerability likely won’t apply to you.
Since NFTs are still so new and have only been well-known for less than a decade, people rightfully have concerns about the safety and security of buying and owning an NFT in 2022. The good news is that there are security upgrades constantly taking place on the platforms of cryptocurrency platforms and NFT providers to protect users and their NFT acquisitions.
You should always make sure to protect your digital wallet and store your cryptocurrency addresses in a safe place. Always keep any sensitive information in encrypted files or in a place where they cannot easily be retrieved by other people. You should also ensure that your network is safe and secure, and not vulnerable to a potential cyber attack from hackers.
NFTs can sort of be treated as an investment, too. You should understand how an NFT fits into your portfolio and understand the risks of the value deteriorating. Investors try to make safe investments when they buy stocks, bonds, or any other type of financial asset. The same thought process should apply to NFTs, since they can fluctuate in value.
Conclusion to Non-Fungible Tokens (NFTs)
Now that you’ve had the opportunity to learn all about how NFTs work and function, it’s a good idea to summarize everything that we have talked about. Keep in mind that we’ve only covered the basic fundamentals and there’s always so much more to learn about the evolving industry of cryptocurrency and NFTs.
Since you now know that cryptocurrency and NFTs are very similar, you should try to remember that the primary difference surrounds the fact that NFTs cannot be identical, while two cryptocurrency tokens can be identical. In addition, NFTs do not have an unlimited supply, in-fact, most of the times an exclusive owner exists for an high-value NFT.
While digital artwork is one of the leading types of content that focuses on using NFTs for digital transactions and ownership verification, other industries are also starting to take advantage of the NFT marketplace. We’ve seen video game providers use NFTs to verify ownership of items in a video game for certain players. Even online videos, graphic work, and music have been used with the blockchain technology that is focused around the NFT global marketplace.
The advanced technology behind NFTs is extremely difficult to understand, especially since it is so new. While you may struggle to understand it, just know that millions and millions of people have been safely using this technology to conduct work across a variety of sectors. Follow our simple guide of acquiring Ethereum or any other supported cryptocurrency to make an NFT purchase through your digital wallet on any NFT provider on our recommended list.