NFTs (Non-Fungible-Tokens) have expanded into mainstream media, with celebrities and huge brands becoming involved. Adidas made some NFTs with the Bored Ape Yacht Club. Coca-Cola and McDonald’s have both included NFTs in their marketing strategies. Furthermore, major corporations are getting into the game, with Taco Bell, Pizza Hut, and Pringles all releasing their own NFTs. Also, Visa even paid $150,000 for an NFT.
Whether you think of NFTs as a dubious trend or a fantastic new opportunity for creators, there’s no doubt that they’re getting traction, and some people have managed to turn them into companies. So, what exactly are NFTs?
NFT stands for a non-fungible token, which implies there’s a unique unit of data kept on a digital ledger via blockchain technology which provides proof of ownership. To ensure the uniqueness of each NFT and to verify who owns it, the same technology is used just like in cryptocurrencies. “Non-fungible” means that it cannot be replaced with something else; for example, you can replace a dollar bill with another dollar bill and have the same thing. This means that the dollar bill is fungible. But you can’t replace the Mona Lisa with another piece of art; the Mona Lisa is non-fungible because there’s only one with the exact same characteristics.
How do NFTs Work?
Most NFTs are, at a high level, part of the Ethereum blockchain. Although Ethereum is a digital currency, its blockchain also enables these NFTs, which hold additional data that distinguishes them from other currencies. It’s worth mentioning that various blockchains can use non-fungible tokens in their own ways.
Non-fungible tokens are created “minted” from digital objects such as:
- Art
- GIFs
- Collectibles
- Virtual avatars and video game skins
- Designer sneakers
- Music
- Videos etc…
NFTs can be pretty much anything, as long as it’s in the digital realm, then it can be turned into an NFT.
Where Can I Buy NFTs?
Well, don’t think you can be the next millionaire by just right-clicking and saving that GIF of Nyan dogecoin. Acquiring NFTs is more complicated than most people think. That GIF is only a copy of the original one, although it is completely identical, this one does not hold the information that makes it part of the blockchain and identifies it to be the original one.
If you’re interested in purchasing non-fungible tokens, you may do it on a number of platforms, depending on what you’re looking for. You’ll need a digital wallet that’s particular to the site you’re buying on, as well as cryptocurrency to store in it.
Because of the great demand for several varieties of NFT, they are frequently issued as ‘drops,’ similar to how events are regularly delivered in groups at various times. This implies that when the drop begins, there will be a frenetic rush of enthusiastic purchasers, so be sure to register and have your digital wallet filled up and ready to pay.
Here are some sites where you can purchase NFTs: OpenSea, SuperRare, Nifty Giveaway, Foundation, VIV3.
What’s the Point of NFTs?
NFTs are gaining popularity among artists, gamers, and corporations in a variety of industries. In fact, it appears like new players are entering the NFT market every day. Getting into the NFT realm gives artists another outlet for selling their work, as well as a means for supporters to appreciate it. Small, quick-to-create GIFs to more elaborate artworks are all examples of NFT art. Celebrities are getting involved as well, either as collectors or as creators of their own NFTs.
Meanwhile, NFTs are profoundly changing the idea of video game in-game purchases. Until recently, all digital assets purchased within a game remained the property of the game maker, with gamers purchasing them to use temporarily while playing the game. However, NFTs imply that asset ownership has been transferred to the buyer. That means they may be purchased and sold throughout the gaming platform, with additional value-added depending on who has possessed them previously.
Brands are increasingly turning to NFTs as a source of revenue, and we have seen a wide range of companies jump on board. In less than 30 minutes, Taco Bell’s taco-themed GIFs and images sold out. Despite the fact that each NFT included a $500 gift card, that might justify their initial attraction.
Even tweets can be sold as NFTs. The first-ever tweet sent by Twitter co-founder Jack Dorsey was sold for an astounding $2,915,835.47.
Why are NFTs so Controversial?
You may have heard that, while there is a lot of money to be made in the NFT market, there is also a lot of debate, not least because of the environmental effect. The creation of blockchain assets, such as NFTs, requires a significant amount of processing power – and hence a tremendous lot of energy.
CryptoArt.wtf, a site devoted to analyzing the carbon emissions of NFTs, discovered that the creation of ‘Coronavirus,’ a piece of NFT art, consumed an incredible 192 kWh. That’s the energy consumption of a European Union citizen for two weeks. To keep users’ financial data safe, Ethereum and other cryptocurrencies employ a ‘proof-of-work’ method. This technology also consumes a tremendous amount of energy. Ethereum, in fact, consumes about the same quantity of electricity as the whole country of Libya.
Many people in the art community are also unhappy that NFTs are being sold for such ridiculous prices, and that the money isn’t necessarily getting to the artist. Given that NFTs were created to provide control by displaying digital ownership, the idea that they are becoming more elite has sparked debate. The buy-in expenses are excessive for many, and the cost of actually acquiring one means that the market has become a playground for the 1%.
Who Can Make NFTs?
Well, since you have gotten this far, you must be wondering who can actually make NFTs. Anyone may technically create an artwork, transform it into an NFT on the blockchain, and trade it on their preferred marketplace. You may even include a commission in the file, which will reward you whenever the piece is resold.
The hidden costs may be expensive, with sites demanding a ‘gas’ fee for each sale, as well as a fee for selling and purchasing. You must also consider conversion costs and pricing changes based on the day. As a result, the costs might frequently be far more than the sum you receive for selling the NFT.
Should You Invest in NFTs?
However, keep in mind that the value of an NFT is solely determined by what someone else is prepared to pay for it. You may potentially see a profit in your NFT investment, but you may also not be able to resell your NFT due to low demand or you may lose money by selling it under the original price.
So, use NFTs like you would any other investment: do your research, understand the risks (including the possibility of losing all of your money), and proceed with care if you decide to invest.
The Future of NFTs
In addition, NFTs will usher in the future in which art support will take on a new shape. Because blockchain transactions are direct and not managed by a third party, collectors and fans will be able to directly support their favorite creators.
NFTs, have significantly more potential than other types of digital artworks. NFTs are also used to buy digital land in virtual worlds and to own, license, and produce next-generation music. Some analysts believe that in the future, NFTs will provide access to special deals or limited-edition items.
Takeaways
- NFTs (Non-Fungible-Tokens) have expanded into mainstream media, with celebs and huge brands becoming involved.
- NFT stands for a non-fungible token, which implies there’s a unique unit of data kept on a digital ledger via blockchain technology which provides proof of ownership.
- Most NFTs are hosted on Ethereum’s blockchain.
- Because of the great demand for several varieties of NFT, they are frequently issued as ‘drops,’ similar to how events are regularly delivered in groups at various times.
- NFTs are gaining popularity among artists, gamers, and corporations in a variety of industries.
- Anyone may technically create an artwork, transform it to an NFT on the blockchain, and trade it on their preferred marketplace.
- You may potentially see a profit in your NFT investment but you may also not be able to resell your NFT due to potential low demand.
- Use NFTs like you would any other investment: do your homework, understand the risks, and proceed with care if you decide to invest.
- NFTs, have significantly more potential than other types of digital artworks.
