What is an NFT

What is a NFT?

In 2021, a digital asset called NFT appeared out of nowhere and bombarded the market. The hype was so intense that people were willing to pay millions of dollars to get their hands on a popular NFT.

One of the most popular NFTs is valued at over $90 million.

NFT trading jumped from $82 million in 2020 to $17 billion in 2021. That is around 21,000% of annual growth.

In just one year, NFT sales almost surpassed the conventional artwork market in terms of value.

What is the reason behind such astronomical numbers? Well, for that you need to understand NFT first.

What is NFT?

Google says, “It is a non-fungible financial asset that contains digital data stored in a blockchain”. It is still quite complex. Let me break it down for you.

Non-fungible

Non-fungible stands for something completely unique which cannot be replaced or substituted.

For instance, a bitcoin is fungible. You can exchange it for another bitcoin and you will have the same thing. On the other hand, if you switch one NFT with another, you will have something entirely different.

Every NFT holds a different value depending on the digital data it represents.

Financial asset

A financial asset is an intangible property whose value is determined by contractual claims. Unlike real estate or commodities, a financial asset is more liquid and easy to maintain.

Digital data

An NFT holds digital data that determine its monetary value. The digital data can be anything from audio, video, or art to a tweet. Yes, you heard that right. The founder of Twitter turned his first tweet into an NFT and sold it for $3 million.

Originally, it was supposed to be a marketplace for digital art, but there are no limitations. You can turn anything into an NFT as long as people are willing to pay for it.

Blockchain

In terms of NFT, a blockchain is a distributed ledger that holds shared information about the NFT. You can find the origin, sales, value, and ownership of an NFT from any part of the world.

So, let’s read it again.

“A non-fungible token is a digital financial asset that holds digital data stored in a distributed ledger, or blockchain.” It makes much more sense now.

Now that you understand NFT. The next question is….

How a NFT will Benefit You?

Now, this is a subjective question. It depends on whether you want to sell or buy NFT. Luckily, NFT works well for artists as well as buyers.

As an artist

Artists are highly drifted towards NFT because of its huge marketplace. Especially as a digital artist, you couldn’t do much with a really cool sticker design. But NFT can do wonders for you.

  • You will get a reasonable price for your art without struggling for it.
  • Your name will be etched on it forever. That too on a global platform.
  • You will receive a royalty amount whenever the NFT goes through a secondary purchase.

It is a win-win.

As a buyer

All the NFTs are not sold for millions. More than half of them are sold for under $200. Even as a mundane buyer, you can gain a lot from an EFT.

  • You can financially support your favorite artists. An NFT marketplace bridge the gap between the art and the buyer.
  • Buying an NFT gives you full authority over it. You can flaunt your ownership by posting it online.
  • As a millennial, you can have pride in owning a one-of-a-kind digital artwork. Every time someone will access that NFT from anywhere in the world, your name will be there as the current owner. Pretty cool right?
  • You can further sell your NFT to make a profit out of it.

An NFT is an insanely collectible item.

So….

How to Get One for Yourself?

Meta is working on NFTs to bring them to the mainstream but as of now, you can only buy an NFT using cryptocurrency.

Here’s how to do it:

Step 1: Purchase some cryptocurrency like Bitcoin, Dogecoin, or Etherium and link it to your crypto wallet.

Step 2: Choose any popular NFT marketplace like OpenSea, or Rarible and connect your digital wallet.

Step 3: Find an NFT and place a bid.

Step 4: Once all the conditions are met, the NFT marketplace will complete the transaction, and you will get the ownership of that NFT.

Conclusion

Digital art can be downloaded, copied, or shared over the internet. But there is something different about owning an original Monet than having a fake one. On top of that, it is a financial asset that might turn out to be profitable.

Your digital art collection might get a price tag of a million dollars. Who knows?

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