As Bitcoin is considered an alternative to fiat currency, non-fungible tokens, commonly known as NFTs, are the digital answer to collectibles.
The hype around NFTs is ever-increasing as they have become a cultural phenomenon. Whether memes, digital art, or play-to-earn games, you can find NFTs in any form. According to Finder’s Global NFT Adoption report, NFT ownership is rising globally, with Southeast Asian countries like Thailand, the Philippines, and Malaysia leading in NFT ownership and awareness.
Still, some people get confused by the word NFT and wonder what the term refers to. The same report reveals that 70.6% of people in the US do not know anything about NFTs, so a lot more awareness needs to be created.
What are NFTs?
Non-fungible tokens are a digital way to prove the uniqueness of an asset. When we talk about fungible assets, we give them a certain value that makes them interchangeable or tradeable in the market. If you swap a dollar bill for ten dimes, you will get the same value. However, you cannot interchange a non-fungible item with something else because of its unique nature. In simple words, no two NFTs can be the same.
When you think of NFTs, you associate them with rare coins, trading cards, or a limited-edition designer watch. Their unique properties render them unable to be interchanged with anything else. An example is Mona Lisa; you can click a photo or save the image, but there will always be only one original painting. You might imitate it, but the original remains irreplaceable.
Like any other piece of property, you can trade NFTs, but they do not possess a tangible form. Since secured on the blockchain, it guarantees the ownership of the asset.
While NFTs are usually used for trading digital artwork, they can also include photographs, GIFs, digital trading cards, or tweets. However, the real hype is around digital art.
How Do They Work?
Similar to traditional art, NFTs also derive their value from being one-of-a-kind. Anyone can duplicate digital files any number of times, but NFTs are tokenized by blockchain, making them verifiable.
While you can easily sell your work as an NFT, the recent interest and hype have taken their value to millions of dollars. The first-ever tweet by Jack Dorsey was sold for a whopping $2.9 million.
Why Can’t People Copy Digital Art?
Even traditional art has been copied, so nothing’s stopping people from replicating NFTs. People created millions of memes of Nyan Cat, copied and shared them on the internet.
Nevertheless, the buyer owns the digital token, proving ownership of the original work. You can compare it to buying an autographed t-shirt of your favorite artist. Right now, the use of NFTs is only limited to bragging about them at the dinner table among friends and family, but this is just the beginning.
How to Purchase NFTs?
Before buying an NFT, you need to look for the right marketplace, choose the correct wallet, and make sure that you use the right cryptocurrency to complete the deal. The most commonly known NFT marketplaces are OpenSea and Mintable.
Apart from the price tags, other considerations while buying NFTs are the transaction gas fee and the energy required to complete the transaction on the blockchain. Other charges include converting dollars to crypto and the specific platform fee.
NFTs have grown significantly in the past years, and they have a long way to go. A digital revolution awaits us where NFTs will transform how we interact in the virtual world. The concert tickets, property deeds, and favorite gifs might become NFTs of tomorrow.