What Is an NFT?

Updated on April 1st, 2022

Last year's NFT gold rush gained massive media momentum. Everybody wanted a piece of the action including the kids. Not to mention some kids made a large amount of money selling NFTs online. Even Paris Hilton came on the Jimmy Fallon show to school the latter about NFTs. The sale peaked during the middle of last year when $102 million of these were sold in a single day. The crypto-collectibles market made up $100 million of those sales. So what is an NFT and why all the attention?

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What Is an NFT?

NFT or a Non Fungible Token is a digital asset that can be bought and sold online. The asset could represent any real-world objects like art, music, in-game items, and videos. These tokens live on blockchain, most commonly on Ethereum blockchain. Various other blockchain companies have started to implement their own versions of NFTs, however, Ethereum is still the king. Once you sell NFTs Ethereum coins will be credited to your Ethereum wallet.

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The recent NFT boom was associated with fine art collecting as it was largely used to buy and sell art. You might all remember the 12-year-old, Benyamin Ahmad who made $400,000 selling unique digital collectible whales, which he called Weird Whales. Even Jack Dorsey, the billionaire CEO of Twitter sold his NFT, which was a tweet, for over $2 million.

Now you might be wondering if it is a digital asset why can't it be copied instead of spending millions of dollars. Well, the truth is it can, the hype is about owning the original. Just like how a Picasso painting can be copied but the original always hold value. In our opinion, people will spend money on just about anything that appeals to their fancy.

That being said NFT does come with a copyright and a digital signature. They are not interchangeable and each of them contains unique assets owned by a single person.

How Does an NFT Work?

The question that really had strike your mind is How Does Non Fungible Tokens Work. This is very pertinent and obvious questions. As mentioned earlier, NFTs typically live on the Ethereum blockchain. Each of these tokens contains unique information like the names of the buyer and the seller. This attribute makes them easily verifiable. NFT will give you a blockchain-based digital certificate for your digital collectibles. This certificate serves as the unique identifier for your artwork, collectibles, videos, etc. Once you have the certificate, you can start selling your NFTs.

NFT Vs Cryptocurrency

Cryptocurrencies are fungible, which means they can be exchanged for other cryptocurrencies for an equal value. NFT, on the other hand, cannot be exchanged for another NFT. It would be something similar to trading your Pokemon card with another or even trading a stamp of a country from your collection with one that is in your friend's collection.

To get into the NFT trade you will need a crypto wallet with some cryptocurrency. You can get these coins from a crypto exchange like Coinbase or Binance. You can then move it from the exchange to your wallet.

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