A Non-Fungible Token (NFT) digitally represents a digital item. And since we deal with technology and all things digital, we thought it pertinent to offer some insight on what a difficult concept can be to understand. NFTs include art or music, as well as a growing number of physical items. This runs on the blockchain (a secure, decentralized, and cryptography-backed online ledger). NFTs provide proof of ownership of virtual collectibles. Confused?
When it comes to NFTs, confusion and excitement are par for the course.
The sale of multimillion dollar NFTs over the last year prompts growing interest and plenty of questions. Namely, most people wonder what NFTs are, how to use them, and whether interest is warranted.
What are NFTs?
As the name indicates, in an NFT, the token is non-fungible. In other words, it is unique. Thus, no one can directly replace it or exchange it for another token.
The U.S. Dollar & Bitcoin
Fungible assets remain mutually interchangeable. They include things such as the U.S. dollar and Bitcoin. You could exchange one dollar bill for any other dollar bill. What’s more, one Bitcoin always equals another Bitcoin. Also, one can break down fungible assets into smaller denominations (such as four quarters in exchange for one dollar).
NFTs are Unique
Since no two NFTs are the same; they cannot be replicated. Each token is one of a kind. However, here is where things get tricky. NFTs do not necessarily derive worth from their uniqueness, even though that remains part of their value. For example, typically, an NFT links to a specific digital item. As such, it serves as a sort of certificate of authenticity for that item. Tokenizing assets and putting them on the blockchain makes buying, selling, and trading the assets safer and more efficient.
NFTs can also represent unique real-world items which require provable ownership. These include event tickets, unique fashion items, and legal documents such as property deeds and car titles. However, no one has developed the tokenization of physical items yet.
How to Buy Nonfungible Tokens
People sell most NFTs in an online marketplace. Some of the more popular NFT marketplaces include OpenSea, Mintable, Nifty Gateway, Rarible, and Zora. Purchase NFTs using cryptocurrency (crypto). The most popular crypto for buying NFTs is Ethereum. To begin, you will need a cryptocurrency wallet. This is an application which allows you to send and receive cryptos and make purchases. Once you are on an NFT marketplace site, connect your wallet. There, you can search for and buy NFTs. However, to do so, you will bid against other buyers, as in an auction.
What to do with an NFT
As the owner of NFTs, you won’t hold them in your hand or hang them on your wall to impress friends. What you do with an NFT depends on what it is. If it is digital artwork, you can display it on a monitor or inside a virtual world (known as a Metaverse). One is called Decentraland. With NFTs, one can own virtual real estate and other unique items in the Metaverse. In fact, the full potential of NFTs seems inextricably tied to the development of the Metaverse’s 3D digital environment.
This blog does not offer financial advice. So, please consider investing in NFTs at your own risk. Check with a qualified, experienced financial advisor to find out whether you should entertain the idea of investing in them. If you do, please be careful since anything you do online comes with a certain degree of risk. At 208Geek, we aim to help reduce that risk.
About 208 Geek in Meridian, Idaho
Owner/Operator Jacob Van Vliet began building and repairing computer systems for friends and family out of his home in 2001. Jacob was receiving so many requests for computer repair, that in the Fall of 2005, he opened 208 Geek with the vision of providing outstanding service and peace of mind. He has committed 208 Geek to delivering unparalleled, friendly, and professional service, with a 100% satisfaction guarantee.