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The NFT is one such heavy jack that has climbed the success ladders in recent years, generating record-breaking millions through the market.
Non-fungible tokens(NFT’S) are actually digital assets that can be bought and sold on blockchain technology on specialized platforms just like cryptocurrencies.
These tokens have been finding their way into everything starting from the art market to the video games. These are non-fungible which makes them a different type of asset.
You have heard this term a lot over the past few times. You may have watched a few videos, liked them, and kept scrolling, or you may have asked yourself what has quickly become one of the most popular things in the field of blockchain. A lot of you must be wondering but where does all this come from? Let’s take a step back to understand what all this blockchain and NFT actually mean and bring a difference in today’s time.
Everywhere, there is someone discussing the world of virtual money and how it revolves around the investing terminology. This is a one-stop for you to understand what the hell is an NFT?
What does money define? A commodity that is accepted by general consent as a medium of economic exchange. So something through which we can exchange or provide us with a product of value.
It circulates from person to person and country to country, facilitating trade and it is the principal measure of wealth.
The money supply of a country consists of currency(banknotes and coins) and depending on the particular definition used, one or more types of bank money(checking accounts, savings accounts, and other types of bank accounts).
This forms the basis of what keeps revolving around the space of NFT’s and cryptocurrencies through the internet world.
WHAT DO WE MEAN BY THE TERM BLOCKCHAIN
A system of recording information in such a way makes it difficult to change, hack or cheat the system. Increasing the trust, security, transparency, and traceability of data shared across a business network.
A system of recording information such that it makes it difficult or impossible to hack it. Blockchain technology makes itself a mysterious topic with the rapid growth methodology of how an individual’s money revolves. These years are to blockchain what the late 1990s were to the internet.
We talked about having currencies in physical format or being connected with banks. Having digital currencies are the assets that are secured by cryptography(protecting information by transforming it into a secure format, providing secure communication in the presence of malicious third parties known as adversaries). These are termed cryptocurrencies and are made to work by technologies like blockchain. Bitcoin is one such example.
Blockchain is an immutable distributed ledger with many use cases beyond cryptocurrencies.
It holds two fundamental blockchain properties being named immutable and distributed. The immutability of the ledger means we can always trust it to be accurate and distributed; on the other hand, it protects the blockchain from network attacks. Each transaction on the ledger is stored in a “block”.
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The information contained in a block is dependent on and linked to the information in a previous block and, over time, forms a chain of transactions. Hence the word blockchain.
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Types of blockchain
- Public blockchains
- Private blockchains
- Hybrid blockchains
- Sidechains
Blockchain technology cannot be owned, it’s like the internet. Anyone can use the technology to run and own their own blockchains.
Benefits of blockchain over traditional finance?
- Trustless & Unstoppable
- Immutable
- Decentralized
- Lower cost
- Peer-to-Peer & Transparent
In simpler words, blockchain can be explained as :
Block: Ledger : Distribution: Transaction: Confirmation: Proof of work: Result
CRYPTOCURRENCY
Cryptocurrency is digital money that is secured by blockchain technology. We can buy cryptocurrency using a crypto exchange or through a broker-dealer. Cryptocurrency investing can take many forms, ranging from buying cryptocurrency directly to investing in crypto funds and companies.
Cryptocurrencies are FUNGIBLE i.e., they can be traded or exchanged, one for another whereas NFT’s do not innately possess monetary value. Their existence is representative of items with varying monetary values instead such as art, property, etc. This makes them ECONOMICALLY NON-FUNGIBLE, whereas cryptos are fungible like BTC and ETH(can be traded and has innate value).
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What NFT’s could be?
A photo, a drawing, a video clip. Anything like this, you name it. It all starts with a piece of content, this could be original like a drawing or similar to a doodle you make yourself. It could also be something already in existence with a posted tweet.
Ethereum Blockchain
Once created could be “minted” on the blockchain or in simpler language it is turned into an NFT. A blockchain is an official ledger shared by thousands of computers, here storing a record of NFT ownership and transaction history.
Once an NFT is being created it gets stored in your digital wallet. Anyone on the internet can download or share the artwork or even replicate your NFT from the internet. But the blockchain confirms your provenance i.e., proves your ownership of the original and authentic NFT. Another copy cannot have the value the original one holds, blockchain helps in confirming that. Dogecoin is not an NFT but its GIF of dogecoin is officially an NFT.
Once on the blockchain, your NFT is accessed using a wallet. This digital wallet is just the software that decrypts a seed phrase to access the account or address. The account or address is then listed as the owner of the NFT within the NFT contract, and that contract lives on Ethereum.
There is a lot of excitement around going about using the tech to sell digital art.
Is NFT actually about collecting art?
A lot of conversation has been about NFT as an evolution of collecting fine art, only with digital art. This digital art brings a lot new aspects along with it.
A tweet was sold for around $3 million, what exactly does it take? Things become a little awkward when we talk about a piece of art or content that can be downloaded from the internet as many times one wants, even something that’s included with an NFT.
$390,000 for a 50-second video or the person who paid $6.6 million for a video by Beeple, what do we want to mean here? The flex comes from owning an original piece, its ownership. Let’s understand more what exactly the flex means from both perspectives.
THE WORLD OF NFT’s
NFT’s(NON-FUNGIBLE TOKENS) create one-of-a-kind tokens that can show ownership and convey rights over digital goods. They can be associated with reproducible digital files such as photos, videos, and audio. The lack of interchangeability distinguishes NFTs from blockchain cryptocurrencies, such as bitcoin.
Basically, any type of media can be minted or tokenized and turned into an NFT: art, trading cards, memes, gifs, video/audio clips, tweets, and this article - anything. Once tokenized, these assets can be bought, sold, and traded using cryptocurrency. That is what the chuck of NFT’s mean. NFT market topped $40 billion in 2021.
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Non-fungible means that something cannot be exchanged for another item because it’s unique. For instance, one piece of art is not equal to another, both carry their unique properties. Fungible items can be exchanged for another, as one dollar or one bitcoin is equal to another. NFT’s are tokens that live on a blockchain and represent ownership of unique items. Tracking who owns a digital file is tricky because it can be copied and distributed. So how can one prove who is the owner of the original owner when everyone has an identical copy of the file? NFT’s tackle this problem. Imagine we made a piece of digital art, essentially a JPG, on our computer and created or minted an NFT out of this. This NFT that represents our art now contains a bit of information about it, such as a unique fingerprint of the file, a token name, and a symbol. This gets stored on the blockchain and we become its owner. We can now sell this token by creating a transaction on the blockchain(information never gets tampered with). Only the attributes get stored, not the actual product.
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When someone buys an NFT of your artwork, he receives ownership and not a physical copy of it.
The buyer owns the original and the creator gets reproduction rights, still selling prints. These can also be used to sell anything that is unique and requires proof of ownership.
The first tweet by its founder was sold as an NFT. Anyone can see that tweet on his profile but only one person owns it.
NFT’s are SMART CONTRACTS that live on a blockchain, the contract stores the unique properties of the item and keeps track of current and previous owners.
NFT marketplaces are your path to start investing in digital assets, collectibles, but there are lots of options out there.
TOP NFT MARKETPLACES
1. OpenSea
The leader in the marketplace of NFT’s, OpenSea is by far the largest and original peer-to-peer marketplace. According to DaappRadar platform(an analytics platform), it has a total trade volume of over $6.5 billion. It holds all sorts of digital assets on its platform. For new beginners to the NFT world, OpenSea is a great place to start as purchasing and uploading an NFT is a straightforward procedure.
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2. Axie
A shop especially for video games Axie Infinity. It is the second-largest NFT marketplace with trading of more than $2 billion dollars(according to Dappradar) Axie infinity tokens called Axie shards are built on the Ethereum blockchain. It only deals with Axies, which are Pokemon-like creatures. Users can make their new Axies using the game’s built-in breeding mechanics, which can then be further sold on the marketplace.
3. larva labs
Larva labs is also popularly known for the viral CryptoPunks NFT project. They are a series of randomly generated characters with distinct features, some sold for millions of dollars. CryptoPunks NFT’s are sold out, but they can be bid and bought from various third-party marketplaces.
4. NBA Top Shot Marketplace
NBA video highlight clips were one of the first NFT series to find popularity with the general audience. NBA Top Shot is basically a group of digital trading cards incorporating various hot moments. The game's popularity came upon the simple usage for the average person to get started. A few authorization procedures and the user is good to start.
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5. Rarible
A community-owned platform with a broad range of digital art and collectibles, making it one of the major markets on Ethereum. All kinds of media are allowed to be bought and sold on this marketplace, allowing multiple times the selling of a single picture. You would be required to use the marketplace's own token Rarible.
6. SuperRare
The site includes art, videos, and 3D images, but collectors can purchase artwork using Ethereum.
SuperRare recently announced its own token of the same name based on the Ethereum blockchain. The tokens will be used to find and curate new talent for the marketplace. SuperRare NFT’s can also be bought and sold on OpenSea.
Technology applications
1: Digital Art – Because of the blockchain’s ability to assure the unique signature and ownership of NFTs, digital art was an early use case. The first art, named Everydays: the first 5000 days, by artist Mike Winkelmann was sold for US $69.3 million in 2021.
2: Games – we have a lot of in-game, such as digital plots of land which can be controlled by the user instead of the game developer. NFTs allow assets to be traded on third-party marketplaces without permission from the game developer.
3: Music - musicians get an opportunity to tokenize and publish their work as non-fungible tokens. In February 2021, NFTs reportedly generated around $25 million just from the music industry.
4: Film – A while ago, Deadpool 2 digital posters were limited edition to promote the film. They were available from OpenSea and the NFT exchange.
NFT’s are being seen as a new revolution in the market. Many celebrities are attracted to NFT’s and are willing to sell their art digitally
What’s the point of NFT’s?
If you are the creator or in easy words you are the artist, this platform gives you a way to sell your work there otherwise might not be much of a market for. Coming up with a digital idea could be a good deal but could you openly make it value something that the outside world thinks.
NFT does too have a feature that can be enabled to pay you a percentage every time the NFT is sold or changes hands. You could be really benefited if your work gets super popular.
Why are sometimes they called messy?
Well, it's true spending hundreds of dollars for what basically amounts to a trading card, this is where things get a little different.
For some people, it’s like they are the future of fine art collecting or like Pokemon cards. Logan Paul sold some NFTs related to a million dollar box, Logan paul pokemon postcards and even his clips from a video you can watch on Youtube(around $20,000). Big brands like Marvel and celebs like Wayne Gretzky too launched their own NFT’s, which seem to be aimed more at the traditional collectors rather than crypto enthusiasts.
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A lot of marketplaces accept Ethereum if you want to buy NFTs with cryptocurrencies. Technically anyone can sell an NFT and they could ask for whatever currency they want.
NFTs use blockchain technology as some energy-hungry cryptocurrencies which end up using a lot of electricity. Generating a lot of greenhouse gas emissions. But there have been a lot of people working on migrating this is
BUYING NFT’s
There are a lot of marketplaces where we can buy and sell these, OpenSea being one of the big ones out of all.
CREATING A DIGITAL WALLET TO BUY NFTs
You will have to buy ether, a cryptocurrency used by OpenSea. Have you ever played arcade? When you want to play some games you have to buy some tokens to start playing. These tokens here are ether. For the Chrome browser, OpenSea suggests using a plug-in called MetaMask.
Steps for creating a digital wallet
- On the top right side of the OpenSea website click on the profile icon.
- Now tap “get MetaMask” and choose “install MetaMask”.
- Choose “Get started” and select “Create Wallet”.
- Create your password
- Note the secret phase it gives you, as this is very important(acts as a backup to access your account)
- Tap “next” and confirm the secret phase.
- Click “next” to connect the OpenSea account with the MetaMask digital wallet.
- Click “ connect”.
Your digital wallet is ready which is connected to openSea.
Now the next step comes to buy some ether that could be further used to spend on NFTs.
There are a lot of apps to buy cryptocurrencies. Coinbase is quite popular and so is Robinhood. It can also be bought using MetaMask. We have installed the MetaMask plug-in for chrome. We can use the same plug-in to buy the cryptocurrency.
STEPS FOR BUYING NFTs
Tap on “Explore” on the OpenSea website and you will find a lot of photographs be it rotating objects, flashing icons or text sayings.
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Select one of the items you wish to buy.
- Tap “Buy Now”.
- select “checkout”.
- Click “submit”.
- confirm the gas fee(required by the Ethereum network to process the transaction).
Now officially you have bought an NFT.
CREATING NFTs
- Go to Rarible.com and at the top right click “Create”.
- Create a single or multiple collectibles.
- Select “Choose File” and Enter the price for your product.
- Enter in a name for your NFT.
- Now you get to set your royalties(you will get paid if it resells on the secondary market).
- Choose “Connect wallet and create”, tap “MetaMask”.
- Next step is paying the gas fee to process the listing and click start to sell order using your digital wallet.
- MetaMask pops up and clicks “Sign”.
If it ever sells, the funds will get transferred to my digital wallet. Now you can either use this to buy other NFTs or cash out using an app such as Coinbase.
They are still an incredibly new market, which makes you exercise extreme caution with investing in these in the early days. We have to figure out which of the projects is going to provide us with value in the long term. Some good researchers and investors believe these new upcoming projects or current running projects are vulnerable to not being successful investments down the line. NFTs are not land grabs to make quick cash. Many will end up getting burned from their purchases. The most sensible advice would be to educate yourself and decide what projects you truly believe in.
NFTs will open the door for many people with artistic inclinations to explore avenues they never thought were possible. A lot of people would be seen making transitions to a healthy career.
Artists getting royalties from the resale of their digital works will empower creators, leading to a shift in the way art is perceived. They are representing a major shift in culture and modern technology. This will also create opportunities for artists to capitalize on their IP, and everyday people to discover their artistic callings thus changing the perspective of how art is seen.
Associated Press Launching NFT marketplace for its photographs, built by blockchain technology firm Xooa, with NFTs to be minted on the Polygon blockchain.
The initial collection will be released over several weeks starting on Jan 31st, with subjects as space, climate, and specific AP photographs. These would include metadata showing time, date, location, equipment, and technical settings used for the photograph.
Disclaimer: The blog contains some opinionated information which does not make the writer liable for anything.