Current Date: 28 May, 2024

What is NFT and how does it work?

Over the years, Art lovers would go to art galleries and purchase beautiful arts they love. Well with the current digitalization trend, NFTs are the digital answer to beautiful art collectibles. 

What is NFT and How does it work? 

The trading of NFTs started in 2014, but this current digital asset gained popularity in early 2021. they are becoming an increasingly popular way to buy and sell digital artwork Just as everyone worldwide believed Bitcoin was the digital answer to currency, 

Digital artists are gaining millions of dollars, thanks to the massive sales to a new crypto audience. 

Now imagine possessing a piece of digital artwork on the Internet at a reasonable price. You then get a unique digital token known which proves your ownership of the artwork you bought. Wouldn't it be great? Well, that opportunity exists now, thanks to NFTs. 

For instance, Pictures of apes have sold for tens of millions of dollars. The Mona Lisa is one of the most valuable paintings owned by an Italian artist Leonardo da Vinci. He sold it 100 million USDin 1962 (equivalent to $870 million in 2021). 

This painting is however very expensive. But with NFT, Figma CEO Dylan Field, who described the item as his “digital Mona Lisa”, sold it for 57 million USD.  

Jack Dorsey, co-founder of Twitter also sold his first tweet as an NFT for more than $2.9 million. You wonder are NFTs worth the money—or the hype? Some see it as a trend that'll fade out with time. NFT enthusiasts see this as the next big phase for art collection, which can benefit both artists and art collectors.

What is NFT?

Almost everyone spells it out, saying “en eff tee.” The brave call them ‘nefts. NFT stands for a non-fungible token, which means digital assets cannot be replaced or interchanged because it has unique properties.  

For example, a bitcoin is fungible that meaning you can trade one for another bitcoin, and you’ll have exactly the same thing. But NFT can't. This is how NFT is different for Cryptocurrency. 

Famous digital artist Mike Winklemann, nicknamed “Beeple,” crafted a composite of 5,000 daily drawings to create the most famous NFT of 2021, “EVERYDAYS: The First 5000 Days,” which sold at Christie’s for a record-breaking $69.3 million. 

Earlier we asked, why are NFT's so expensive? This is because NFT allows the buyer to own the original item. Also, it contains built-in authentication, which serves as proof of ownership. Some of these owners prefer the 'ownership right' to the original Item. Funny right?

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Features of NFT
Digital Asset 

NFT is a digital asset that represents Internet collectibles like music, arts, Crypto punks and games with an authentic certificate created by blockchain technology that underlies Cryptocurrency. 


Unique 

 It cannot be faked, forged or manipulated. NFTs' unique data makes it easy to verify and validate their ownership and the transfer of tokens between owners.


Exchange

NFT exchanges take place with cryptocurrencies such as Bitcoin on specialist sites. 

How does NFT work? 

Blockchains is a public ledger that stores data without risks of trusting one company or entity to keep things secure and accurate. 

Most NFTs are part of the Ethereum blockchain, though other blockchains have implemented their own version of NFTs. As we know, Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also keeps track of who’s holding and trading NFTs.


Specifically, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well. NFTs exist on a blockchain.

Examples of NFT

An NFT is formed or “minted” from digital objects that represent both tangible and intangible items, including:


Art

GIFs

Videos and sports highlights

Signatures

Tweets

Collectibles

Virtual avatars and video game skins

Designer sneakers

Music



NFTs are good investments due to the rising prices. Many buyers sell the NFTs even within a few hours of purchase to gain from the price hike.NFTs are also emerging as a new avenue for artists to monetise their artwork.

It is however Risky as Crypto products and NFTs are unregulated and no recovery for any loss from such transactions

Excellence Chukwuma Chukwunaedu

Excellence Chukwuma Chukwunaedu

I enjoy marketing, technology and business. I help businesses and brands connect with their ideal customer profiles and build products that excite them and solve their problems.