NFT, aka Non-Fungible Tokens, is one of the use cases of blockchain technology. NFTs use cryptocurrency as their underlying payment method. Billions of dollars have been invested in NFTs this year alone, and more and more applications are popping up each week. This article is all about NFTs. I have tried to simplify complex technology in simple terms so that even a non-technical person can understand what NFTs are all about and why they have become a hot topic this year.
NFT, a Non-Fungible Token, is a blockchain-based token that prevents users from creating multiple copies of a piece of content. This characteristic of the blockchain ensures that there can only be a single copy of digital content. In addition, blockchain ensures the owner digitally signs the content using a cryptography algorithm and stores the digitally signed copy on a public blockchain.
This article talks about the fundamentals of NFTs and more. In this article, I will cover the following topics,
- What is an NFT
- What does NFT stand for
- Why NFTs
- How to make an NFT
- How to buy and sell NFTs
- What is NFT Art
- How to make NFT Art
- What is NFT Crypto
- How to buy and sell NFTs
On March 23, Jack Dorsey's first tweet ever posted on Twitter sold for $2.91 million to @sinaEstavi. It was purchased in a bidding process where Justin Sun, Tron blockchain founder, offered $2 million.
The tweet was put up for sale on an NFT trading platform called Valuables, which allows people to buy and sell tweets—the following tweet sold for $352.08 or 0.1771 ETH.
These were just tweets. What about other content like paintings, videos, photos, text, voice, and even music tracks? The answer is yes; any digital content can become an NFT.
The most expensive NFT, Beeple's "Everydays: the First 5000 Days" was sold for $69.3 million.
The most expensive video was Beeple's "Crossroad" which was sold for $6.6 million.
The most expensive song was "Gunky's Uprising." by SlimeSunday and 3LAU, which sold for $1.33 million.
What other NFTs and their prices? Check out the Top 10 Most Expensive NFTs Ever Sold to learn about the most expensive NFTs ever sold.
What does NFT mean?
What does "buy" this tweet mean? Simply, it means proof that the tweet is unique, digitally signed, and verified by the creator. This proves that Jack Dorsey's first tweet is now owned by @sinaEstavi as a collectible, and he can sell it to anyone whenever and for whatever price he wants. It is now stored in the form of NFT on a blockchain. By converting this tweet to an NFT (non-fungible Token), @sinaEstavi has proof of ownership of this tweet and when it was purchased. In the future, if he wants to sell it, he can transfer the ownership to a new buyer.
Now let us compare this with the most famous painting in the world, the Mona Lisa by Leonardo da Vinci. Everyone knows there is only one original Mona Lisa painting in the world. Because it is an original work of art by a master, the value of the original painting is much more than its copies.
NFTs are an e similar idea, where "the content" is digital. The singularity of the content is protected by using a blockchain in the form of an NFT, and the owner has publicly-available proof.
What does NFT stand for?
NFT stands for non-fungible token. Each token is minted on a blockchain and is unique in itself.
The NFT concept has been around for several years now, but it was in 2021 when NFTs became the craze and mainstream phenomenon. In 2014, Kevin McCoy and Anil Dash introduced the concept of non-fungible, tradable blockchain markers at an event in New York City. Then, in October 2015, right after the launch of the Ethereum blockchain, the first NFT project, Etheria, was launched at DEVCON 1 in London, UK. But at that time, people didn't care about NFTs until now.
Why would you want to buy or sell NFTs?
The purpose of buying NFTs is like buying and owning a baseball card, an autographed jersey, a famous work of art, or a vintage car. One purpose is to own it and have a good feeling about it, and the second is to keep it and hope its value goes up so you can sell it and make a profit.
A photographer or an artist may want to auction their photo or art as an NTF for money. Then, the buyer can relax and feel that there is proof that it's an original, and no one else can claim the photo or art they purchased as an NFT.
Now that you understand what NFT is and why someone would want to buy or sell NFTs, let us take some famous NFT applications already in business.
What are the most popular NFT projects?
The following is a list of the top 5 NFT projects (not in any particular order) that are life and show good use cases of NFTs.
- NBA Top Shot
- Cryptopunks
- Sorare
- CryptoKitties
- Hashmarks
The NBA launched a trading platform in partnership with Dapper Labs called Top Shot that allows people to collect, buy, and sell NBA highlights, photos, and videos. For example, a Lebron James NBA highlight was sold for $200,000.
A Kevin Durant's dunk is being asked for over $1k.
CryptoPunks, developed by Larva Labs, is a collection of 10,000 uniquely generated characters. No two are exactly alike, and a single person can officially own each using NFT stored on the Ethereum blockchain; a person has proof of ownership of that character.
Not only can you buy punks on this platform, but you can also sell the punks you own.
Sorare is a platform for people to create fantasy football games, collect cards, and trade them.
CryptoKitties allows you to collect, breed, and sell digital virtual cats. You can also breed virtual cats. Each cat on the platform has unique features and skills.
The platform is based on the Ethereum blockchain and uses ETH as a digital currency to buy and sell virtual cats.
Hashmarks allow art creators to sell their art and buyers to buy and own art on a blockchain. A piece of digital content on Hashmarks is called a Hashmark, and each Hashmask is owned by one user only.
The NFTs are stored on the Ethereum blockchain and hosted on IPFS.
How Is NFT Different Than Cryptocurrency?
Both NFTs and cryptocurrencies use blockchain technology to create tokens. Blockchain uses a cryptographically secure, distributed ledger that is publicly available. To learn more about blockchain and understand the difference, check out What Is Blockchain.
A cryptocurrency is a "fungible" token. It means a token is exchangeable or replaceable by another identical token or coin, and multiple tokens may exist. For example, there will be 21 million Bitcoins once all Bitcoins are mined, and each BTC is equal to the other BTC in value. That also means that a BTC is not unique. Like BTC, all cryptocurrencies, such as ETH, ADA, XRP, and STRAX, are fungible. This is because there are billions of some of these coins or tokens, and they are all the same in value.
NFT tokens are non-fungible. That means each Token is unique, and there is no other token like it. . Therefore, they can be traded for similar tokens or currencies, but no same token exists. It is like a unique piece of art created by an artist that will have no identical copy. This is what makes NFT valuable. Once you own an NFT, no one else can own that exact one, and if someone wants it, you can ask whatever price you want.
In the case of NBA Top Shot NFTs, each highlight is unique, and there is no other copy. Once you oSo oncet, you can sell it for whatever price.
What are the advantages of NFTs?
The most extensive use of NFTs is proof of ownership. If you like a character in a game and don't want anyone else to have the same character, you can buy and own the NFT.
For game creators, NFTs are a revenue stream. They can create unique characters and sell them for a price.
Traders can buy NFTs, hold them, and sell them when their price increases.
Artists and musicians can convert their art and music into NFTs and sell them for a premium price.
How Do NFTs Work?
To understand how NFTs work, you must understand its underlying technology, blockchain. Blockchain is a distributed ledger that is secured using cryptographic computer algorithms. A blockchain stores all transactions on a public ledger distributed on a network of computers called nodes. Each participating node on a blockchain has the exact and complete copy of entire blockchain transactions.
NFTs are stored on one of the popular blockchains that support NFTs, such as Ethereum and Stratis.
An NFT is created from digital objects such as photos, videos, content, and combinations. Creating an NFT is called minting; once an NFT is created, it's called minting. Some examples of NFTs are art, images, videos, copy of tweets, collectibles, sports cards, sports highlights, and music.
The owner of an NFT owns the digital copy of an item that is stored on a blockchain. The owner of an NFT gets exclusive ownership of the item. Since NFT is on the blockchain, the data stored in an NFT can be customized.
It is up to the owner how they want to sell NFTs. They can have a fixed price or a bidding process. In addition, publicly available platforms (apps, websites) allow individual artists to convert their digital content into NFT and sell it.
NFTs are bought using a cryptocurrency such as ETH or STRAX, depending on the blockchain they are stored on.
What is NFT Art?
One of the applications of NFT is NFT art. We just saw an example of Hashmark, where artists can buy their art as an NFT. Any artist can turn their art into an NFT that will be saved on a public blockchain and sell it for a price. People can also bid on art. Only one owner can own the art at a time. The payments are made in a cryptocurrency used to run the used blockchain. For example, NFTs stored on the Ethereum blockchain will require buyers to pay in ETH, and NFTs stored on Stratis Blockchain will need buyers to pay in STRAX.
The most famous NFT is Beeple's EVERYDAY: THE FIRST 5000 DAYS, sold for $69 million. The collection is an image of 5,000 images that were taken each day since May 2007.
CryptoPunks is perhaps the most popular application of NFTs, where 10,000 unique characters are available and stored on the Ethereum blockchain with proof of ownership. Each character can be purchased and owned by anyone at any time.
As you can see from the above list, top CryptoPunks are sold for close to $1 million or more.
What is NFT Crypto?
A cryptocurrency is used to buy and sell NFTs. The cryptocurrency used for NFTs is called NFT Crypto. The most popular NFT crypto is ETH, a digital currency that fuels the Ethereum blockchain. All NFTs stored on the Ethereum blockchain must use ETH to trade.
How to buy NFTs?
If you want to buy an NFT, several public platforms offer to buy, sell, and trade NFTs. These platforms are called NFT providers. In addition, NFTs can be purchased using cryptocurrencies that NFT providers support.
Before buying NFTs, you need a digital wallet to store NFTs and cryptocurrencies. Here is a shocker. When you purchase and store NFTs in a wallet, you hold keys that prove ownership, not actual NFTs. Actual NFTs (digital content) are stored on a public blockchain where anyone can see what key owns the NFTs.
First, you must buy cryptocurrencies like ETH, BTC, and STRAX. Then, you can buy these cryptocurrencies on popular crypto exchanges such as Coinbase, Kraken, Binance.us, or Robinhood. These crypto exchanges allow you to use a credit card, debit card, or bank account to pay for crypto. However, buying and selling on crypto exchanges is not free. There is a fee for every transaction, which can be as little as 1%orn up to 4%. So, do your research before you buy any crypto. To learn more about the most popular crypto exchanges, check out Top Crypto Exchanges In the US.
Once you have crypto, you need to transfer it to a private wallet where you can store it. This is the wallet you can use to buy NFTs.
To buy NFTs, you need to use a platform. Some popular platforms to buy and sell NFTs are Nifty Gateway, SuperRare, Foundation, OpenSea, Rarible, and Mintable. In addition, the specialized platforms allow only certain NFTs, including NBA Top Shot, CryptoPunks, CryptoKitties, and Hashmarks.
Should I Create My NFTs?
Can anyone create an NFT and sell it? YES. If you think you have unique digital content that someone may want to buy and own, you can create and sell an NFT.
It would be best to remember a few things when creating NFTs.
First, you must be the original owner or creator of the content.
Second, before you create your own NFT, you must consider whether this digital content would be willing to pay for it. If no one wants it, it is useless to create an NFT.
Third, there is a cost associated with creating NFTs. Since NFTs live on a blockchain, a technical process is involved. It is not as simple as uploading a file to cloud storage.
Fourth, you must have some understanding and knowledge of cryptocurrencies. All NFTs are traded in the form of cryptocurrencies. A cryptocurrency is a fuel that runs a blockchain, and the cryptocurrency depends on the blockchain you use for your NFT.
In theory, any digital content can be converted into NFTs. But not all types of digital content make sense to convert into NFTs. The keywords are "unique" and "wanted." You can compare NFTs with famous paintings which many art lovers want to own. The more original and unique the painting, the more likely it will be in demand. One of the most famous paintings, Salvator Mundi by Leonardo Da Vinci, is priced at $450 million.
Some people buy art to own, while others buy it to make a profit from it. The same applies to NFTs. Some people buy NFTs to own them, but others buy to hold and sell them when the price is right. For example, the NBA is selling NBA players' highlights as NFTs. So if you buy a player's dunk and that player wins NBA titles, chances are the NFT will fetch much more than its initial price.
Here are some examples of NFTs,
- Popular unique art
- Famous people's content, such as Tweets
- Players' highlights, signed photos, and unique shots
- Avatars
- Paintings
- Video game characters
- Videos
- Music
Summary
This article explains what NFTs are all about and why one should pay attention to this newest use case of blockchain technology. We also learned about popular NFT platforms and how one can buy and sell NFTs. Stratis Blockchain allows you to create NFTs using C# and .NET. In my upcoming article, I will cover how to create your NFTs and to them re on the Stratis blockchain and buy and sell them on the Stratis NFT marketplace. You can buy NFTs via online NFT marketplaces. Check out How to buy NFTs to learn more.
Stay tuned!
Note: This article is for informational purposes only and shall not be used as financial or investment advice. All images used in this article are the copyright of their respective owners.
Saravanan GanesanPosted Dec 7, 2023, 1:09 PM
Great article about NFT !!!!