What are NFTs?
NFTs, short for non-fungible tokens, are new types of crypto assets that indicate a variety of palpable or non-physical goods. The ownership of these tokens is recorded on a blockchain, similar to bitcoin and other cryptocurrencies. But unlike them, which are interchangeable, NFTs aren’t exchangeable.
How do they work?
Most NFTs were created utilizing ERC-721 and ERC-1155 Ethereum token standards. Even though Ethereum is a fungible digital currency like Bitcoin, its blockchain sustains NFTs as well.
Internet growth in our everyday lives gave us the possibility to view images or listen to songs online for free. NFTs are becoming very popular because they are transforming the collectible space, and not only that.
Since NFTs aren’t exchangeable, you won’t be able to trade one NFT for another as you do with fiat currencies or other assets because there are no two identical tokens. Since they are unique and also kept on the blockchain, NFTs are authentic.
That’s very beneficial for digital assets, because they can be copied innumerable times, and are difficult to own. NFTs can be the solution to these problems, proving that one digital file is the only “original.”
They can be beneficial to:
- Buyers: They can get an ownership certificate of a digital item, which will safeguard its value.
- Sellers: They can sell something, but are able to keep the income in the future. Usually, artists have problems receiving recompense when their piece’s value increases. NFTs can permit the author to get paid every time the token gets traded.
NFTs saw a huge increase in popularity during the pandemic of COVID-19. Due to lockdown restrictions, people are spending more time on the internet, and are saving money. They are investing more in digital assets and according to a study from NonFungible and BNP Paribas-affiliated research firm L’Atelier, the value of transactions using NFT amounted to $250 million last year.
NFTs, like all other cryptos, have been dealing with a lot of skepticism. A lot of people think they are just another trend that will pass with time, but the companies behind these tokens disagree.
Another reason people believe there is no future for NFTs is because of the high volatility of cryptocurrency. Most of the items available for trading are priced in ether (Ethereum coin), which is still very unstable, going from $2,000 to $600 in just a few days.
How to get NFTs?
Since NFTs run on Ethereum’s blockchain, before purchasing them, you should buy ether. After storing them on your digital wallet, you will be able to start trading with NFTs on a vast amount of platforms.