The unique digital identifier, NFT, which has hidden away from limelight since 2015, finally gained the attention of the public in 2021. And since then, has evolved into a global commodity. Almost everyone knows about NFTs. We’d see that during the last world cup, Qatar 2022.
The idea behind it, is bringing together the characteristics of decentralized blockchain technology and that of non-fungible assets to create tokens that are provably genuine and can as well be traded in the marketplace.
For the purpose of this article, we will be looking at what NFTs are all about.
What is NFT?
NFTs is an acronym which means Non fungible tokens. They are digital assets that usually come in the form of artworks, sports collectibles, comic books, trading cards, games. Etc. Each of them has an authentic certificate or signature which is provided by a blockchain technology, that differentiates one from another and equally attaches value to them.
Unlike, other cryptocurrencies, NFTs confers rightful ownership to the holder and this right cannot be interchanged or replaced. It doesn’t include the right to reproduce or adjust an NFT, unless the agreement between the holder and the original creator stated otherwise.
How Does NFT Works?
The non fungible token sits on a blockchain whose value is determined by the crypto market.
Ethereum blockchain, however, has become quite popular when it comes to trading NFTs.
In order to trade in NFTs, you will first need to open a crypto account with the blockchain technology of your choice. This account will allow you trade in cryptocurrencies. In addition, it will have to be compatible with Ethereum which is their main blockchain.
The account gives you access to a personal key called a unique seed phrase which confers a personal ownership of your wallet.
Wallet can be hosted independently or on an exchange, and the host determines the bearer of the wallet and private key. When it is independently hosted, the bearer will have sole access to these properties. But, when it is hosted by an exchange, the company is responsible for the safe keeping of your properties.
The next step is to connect your wallet to an Ether. An Ether is the native cryptocurrency of Ethereum blockchain. You will have to buy an Ether which will be transferred to your wallet. This process, however, varies with different exchange, crypto wallet and market place.
Once you have successfully connected your wallet, you are then eligible to buy and sell NFTs in the market place.
The Different Types of Marketplace
An NFT marketplace can either be open, closed or proprietary.
When a marketplace is open, it allows anyone to buy, sell or mint NFTs. When it is closed, NFT trading is restricted since you must apply before you can join, and the marketplace does the minting itself.
In a proprietary marketplace, on the other hand, the marketplace only trades their own NFT. The advantage here is that it usually comes with discounts or reductions of fees incurred on the external wallet.
Some common NFT marketplaces users can easily access include Open Sea, Rarible, Nitty Gateway, and many others.
Summary
In conclusion, with the invention of NFTs, people can now store and invest in their valuables using cryptocurrencies. Celebrities and dignitaries now enjoy global spotlight as their digital assets gets higher recognition with a significant value attached to them. A typical example is the first tweet of the CEO and founder of Twitter, Jack Dorsey, which is currently worth 69.3 million as a digital asset.
We are, however, yet to see the wonders, NFts will unfold in our digital economy in the nearest future.