Non-Fungible Token or in short NFT, is referred to real-world objects such as art, music, in-game items and videos, that are presented via digital assets. When content is logged onto the blockchain, every transaction varying from transfers to sales is recorded on-chain, which creates an easily accessible ledger of provenance and price history. The main impact of NFTs is to facilitate to own and sell digital content. Despite the fact that NFTs have existed since 2014, they are getting popular these days and the number of transactions is booming. Additionally, they are one of a kind which means they are unique or at least very scarce. Although the NFT might exist ubiquitously, the owner has the right of selling it.
How does NFT work?
An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, including:
• Videos and sports highlights
• Virtual avatars and video game skins
• Designer sneakers
NFTs exist on a blockchain, which is a distributed public ledger that records transactions.
Particularly, NFTs are typically held on the Ethereum blockchain. However, they are also supported by other blockchains.
Normally, NFTs are minted by artists on the market place which includes platforms such as OpenSea, SuperRare, Nifty Gateway, Foundation, and so on. Minting is the creation of an NFT, which means making a smart contract that will be stored on the blockchain. The smart contract contains a lot of crucial information: it lists the creator of the work and ensures that the creator, or other parties, receive royalties each time the NFT is sold. Smart contract is stored on the blockchain but the artwork isn’t since it is too large and it needs quite a huge amount of space. So, NFT consists of two parts: the artwork and the smart contract. The action of minting takes some charges on Ethereum blockchain and that is why artists don’t always do the minting.
How can NFTs be bought?
Firstly, there must be a wallet to store the NFT. Secondly, some crypto token must be bought to pay for the NFT. It can be Ether or other tokens, depending on the owner preference.
Should we buy NFTs?
Despite the popularity, NFTs are still very risky since they have no certain future, according to Yu. “Since NFTs are so new, it may be worth investing small amounts to try it out for now.”, Says Yu. Finally, it’s your decision to buy an NFT and there must be a buyer to pay the money for your NFT.