What is NFT and How Does NFT Work? Non-Fungible Token


Non-Fungible Token (NFT) Definition

In 2021, the auction house Christie’s sold the digital NFT artwork by Mike Winkelmann (also known as Beeple) Everyday: the first 5000 days, for $69 million dollars. Vignesh Sundaresan is now the proud owner of this second most expensive NFT or non-fungible token artwork.

Now, you might ask, what is so unique about this digital artwork that anyone would want to buy the NFT worth a million dollars when even you and I can have the same digital artwork by downloading it or even taking a screenshot! 

The answer to your questions lies in the concept of NFT. So, let’s start by learning about the NFTs, how they work and its future in our world to find the answer to all your questions! 

What is Non-fungible token (NFT)? 

Let’s take the example of the famous renaissance masterpiece, The Last Supper, to help you understand better! You can photograph the artwork or purchase a print. But only one original painting by Leonardo Da Vinci will ever exist. That is exactly the case with NFTs too!

In the digital world, NFTs are unique assets that you can purchase and sell like any other piece of property. A digital file, including the art that comes with an NFT, can be copied as many times as you choose. However, it still won’t be the original artwork. Hence, NFTs are designed to give you something you can’t get anywhere else: ownership of the work. 

NFTs can refer to digital files like photographs, drawings, videos, music, avatars in online games etc. You can compare digital tokens to ownership certificates for virtual or actual assets. The current buzz is focused on leveraging the technology to sell digital art. The Beeple’s artwork mentioned above is the perfect example.

How Does an NFT Work?

On the blockchain, each NFT (non-fungible token) is a one-of-a-kind token. NFTs can be used to “tokenize” artwork, resulting in a digital certificate of ownership that can be bought and sold. The unique data on NFTs makes it simple to verify and confirm their ownership as well as token transfers between owners. 

The majority of NFTs are stored on the Ethereum blockchain. It is a distributed public ledger that keeps track of transactions. They can be purchased and sold like other physical pieces of art. Their worth is mostly determined by market and demand. Smart contracts that, for example, provide the artist a percentage of future token sales can be included in NFTs.

Why Do People Purchase an NFT ?

When you buy an NFT, you usually get some basic usage rights. For instance the right to publish the image online. There’s also the bragging rights of owning the work. It is backed up by a blockchain entry.

They are similar to any other collector’s piece, such as a painting or a sculpture. You are paying for a file and documentation that you own the original copy rather than a tangible item. Furthermore, one of the most obvious advantages of purchasing art is that it allows you to financially support artists you admire.

6 Best Marketplaces to Buy an NFT

Several marketplaces have sprung up around NFTs, allowing users to buy and sell them. Here is the list of some of the examples:

1. OpenSea

OpenSea is a non-fungible token (NFT) marketplace that allows users to find, collect, and trade blockchain-based digital collectibles, gaming products, and other virtual goods. Anyone on OpenSea can use a smart contract to buy or trade these assets.

2. Rarible

Rarible is the proprietor of a community-owned NFT marketplace where people may purchase and sell digital art. You can use it to make, sell, and gather digital objects that are blockchain-secured. Its marketplace enables ethereum users to manufacture and sell digital collectibles by allowing them to trade liquid intellectual assets and any digital material with licensing via NFT tokens.

3. Nifty Gateway

Nifty Gateway is an exclusive marketplace dedicated to the Nifty team’s handpicked artwork and music. This permits some of the top artists and musicians in the world to develop and sell NFTs. Nifty Gateway takes NFT deposits. You can apply on the website to become a Nifty creator and sell your own artwork. 

4. NBA Top Shot 

NBA Top Shots Market is a one-of-a-kind NFT marketplace dedicated to basketball and has a unique set of drops. Although it does not allow users to directly mint NFTs, it does allow them to buy and trade. 

5. Binance NFT

Binance, the renowned and world-leading cryptocurrency exchange, powers the Binance NFT marketplace, which is backed by the Binance ecosystem. The Binance NFT marketplace supports EVM to improve interoperability and offers a number of minting options.

6. Axie Infinity Market

Axie Infinity is said to be one of the most best and expensive NFT marketplaces in the gaming categories. It has a large following among crypto investors. It’s a gaming asset-based NFT market where the gaming platform’s assets can be minted.  

What is the future of NFT? 

Who would have thought the internet would become such an integral part of our lives when it was first introduced! Similarly, being a nascent technology, NFTs have the potential to go a long way. It can turn into something magnificent which could fit perfectly in our daily lives in future. 

Once NFTs become more widely available, they may become a more frequent way to acquire and sell one-of-a-kind assets. These can include a house deed, unique items in video game marketplaces, digital art, music, awards, and more. 

You can’t forge, modify, or replace a NFT after it’s been purchased. The transaction is also logged by an automatic authentication process. So, you can check who previously possessed the NFT. Part of the appeal of blockchain is that it keeps track of every transaction, making it more difficult to steal and resale than, say, a museum painting.

NFTs and other cryptocurrencies have the potential to become a universal currency for global online shopping, selling private property between individuals, and as investments analogous to stock trading, among other things. As the market for NFTs expands, the possibilities are unlimited.

What are your views about it? Feel free to share your opinions in the comment section! You can also mention your experience of using the NFT marketplaces and your reviews for others to learn. 

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