What is an NFT? Everything to know about the expensive digital tokens taking over cryptocurrency NFTs are tied to all types of art, but that doesn't mean you own it. We'll explain.

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NFTs could be a new way to spend art and make money.

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Non-fungible tokens, or NFTs, are a new type of collectible that can earn you big – or not. NFTs debuted in 2017 and have become the new craze faster than any other cryptocurrency you may have heard of. But you can’t keep NFTs in your dresser drawer, like pokemon card, a comic book or painting. They’re completely digital and tied to almost anything — a Video highlight, a meme or even a tweet.

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If it doesn’t make much sense Well for you, you are not alone.

In essence, NFTs provide a blockchain-generated certificate of authenticity for a digital asset or piece of art. Ruchi has created a digital market that has claimed $250 million in sales in 2020, with NFTs reaching new levels of hype from Visa, Warner Music Group and Nike. The craze has prompted people to put up their digital art and tweets as NFTs for sale. even toilet paper companies The latest cryptocurrencies are on the wave. still confused? Here are the answers to your big questions about NFTs.

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What is NFT?

This is the part that is a little open-minded. NFT is a unique digital token, used in most Ethereum Blockchain to record transactions digitally. It is not a cryptocurrency like bitcoin or ethereum, as they are interchangeable for other bitcoins or cash. NFTs are recorded in a digital ledger in the same way as cryptocurrency, so there is a list of who owns each.

What makes NFTs unique is the digital assets associated with the token. This can be an image, video, tweet or piece of music that is uploaded to a marketplace, which creates an NFT to sell. The technology originated in 2015 when unique tokens were created for the Ethereum blockchain, but in February they became a big deal.

Does owning an NFT mean that I am the owner of the asset?

No.

That’s the real kicker to understand the whole concept. The person buying the NFT is not the owner of the real asset.

Jeffrey Thompson, associate professor at the Stevens Institute of Technology in Hoboken, New Jersey, said, “NFTs challenge the idea of ​​ownership: digital files can be infinitely reproduced and you (usually) have the copyright when you buy an NFT. Or don’t buy a license.” .

king of leon

The band Kings of Leon sold their latest album through NFT and made over $2 million from sales.

For example, the producer of nyan cat meme It sold one NFT for $590,000. The person who bought the token has the token, but does not actually have the meme. He still belongs to the producer, who held onto the intellectual and creative rights.

The owner of the token has a record and a hash code indicating ownership of the unique token associated with the particular digital asset. People can download Nyan Cat and use it on social media if they wish, but they will not have the token. This also means that they cannot sell tokens as owners.

Why are NFTs so expensive?

With physical collectibles such as Beanie Babies, baseball cards and toys, there is a market for NFTs. Buyers tend to be tech-savvy individuals who crave the idea of ​​buying digital goods and probably made a killing with cryptocurrencies last year. Ethereum, for example, moved up from just $100 last March to its current price of around $3,400. In some cases, buyers are simply flexing their digital wallets to show how much crypto they hold, but for others, there is a keen interest in it.

“There has been a huge increase in demand, especially for art-related NFTs, due to their innovation and the creativity of early artists,” Jason Lau, chief operating officer of crypto exchange OKCoin, said in an email. “Whether it is a physical work with NFTs attached (think of it as a digital autograph and proof of veracity), or an entirely digital work (where NFTs are art), this new medium is opening up new avenues for collectors and artists. explore the artwork itself as well as their relationship.”

It’s also great for artists, Lau says. By selling digital art directly to those who are interested, an artist can start working without trying to sell it in a gallery.

What types of NFTs exist?

NFTs can be linked to any digital asset. Twitter CEO Jack Dorsey sold First Tweet, as NFT, for $2.9 Million. Tampa Bay Buccaneers tight end Rob Gronkowski created his own limited-edition trading cards that sold as NFTs for a total of $1.8 million. Kings of Leon sold NFTs of their latest album and made over $2 million. New York Times reporter Kevin Roose sold an image of his column about the NFT for $560,000. There is even a guy who sold NFTs for his feet.

Recently, Fortune offered its readers a chance to join the NFT craze. The company sold 256 copies of a limited edition cover from graphic artist ppplacer for Fortune’s August/September magazine on OpenSee. Copies sold out within five minutes starting at $1 Ethereum (estimated at $3,000). But NFTs were available for resale at three times the cost.

And in August, a clip art of a rock, known as Ether Rock, was sold for $400,000 in Ethereum (estimated at $1.3 million). It was priced at $97,716 two weeks ago. And in August, Visa announced its NFT CryptoPunks purchase in Ethereum for $150,000. The Financial Corporation believes that NFTs play a large role in “the future of retail, social media, entertainment and commerce”. And Vine’s co-creator, Dom Hoffman, is reportedly exploring a new way to gamify NFTs with his fantasy gaming console, supdiv.

As the hype for NFTs grows, it is expected that more digital assets will come up for sale and bring in some huge funds.

Where can I buy or sell NFTs?

While you may not want to jump right into six-digit bidding, there are several NFT marketplaces, with OpenC being the biggest. Buyers can discover art, domain names, and random collectibles without breaking the bank.

On the other hand, if you want to sell NFTs of your art, you can use NFTify, Shopify NFT Store to sell NFTs without creating your own store. You will also need a MetaMask account to proceed. And Burberry recently announced a partnership with Mythical Games to buy, sell and collect toys as NFTs through the Blancos block party game. Nerdshala’s own Chris Parker has also created a step-by-step guide on how to build and sell your own NFTs in the video below.

What are the disadvantages of NFTs?

One drawback is the hundreds of dollars in fees required to create an NFT. If you are building your token on the Ethereum blockchain, you need to use some Ethereum which, as mentioned earlier, is quite expensive. Then after creating the NFT, there is a “gas” fee that pays for the work that goes into handling the transaction and that too based on the price of Ethereum. Marketplaces simplify the process by handling everything for a fee when NFTs are sold.

There is also an environmental cost. Like bitcoin, Ethereum requires computers to handle the computations known as “mining,” and those computer tasks require a lot of energy. An analysis by Cambridge University found that mining for bitcoin consumes more energy than the entire country of Argentina. Ethereum is second only to bitcoin in popularity, and its power consumption is increasing and equals the amount of energy used by Libya.

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