NFTs, or non-fungible tokens, have been trending big over the last couple of years. This is mainly because of the power of NFTs to enable unique artwork and assets to be sold for an astounding value online.
Even the most basic but unique images, videos, gifs, and other pieces of art can be auctioned and sold online at great prices, thanks to NFTs.
So, what exactly are NFTs and how are they leading the crypto revolution?
NFTs are digital tokens that represent digital works of art or unique assets and can be seamlessly traded on the blockchain with the ability to easily verify the ownership of the holders.
In simple terms, NFTs allow unique digital entities to be converted into tokens that can be sold and traded securely online.
For the last couple of years, NFTs have been helping artists, designers, musicians, and many other types of content creators worldwide to independently and fairly trade their digital artwork online and get the best price for it from interested collectors/investors.
One of the best examples of the potential of NFTs is Jack Dorsey’s first-ever tweet that sold for a whopping $2.9 million in an NFT auction.
However, the idea of NFTs is not new. CryptoKitties, an Ethereum blockchain-based digital trading game that involves buying and selling unique virtual cat images, has been running successfully for the past some years now.
Some of these cats (NFTs) have been purchased for hundreds or thousands of dollars by intrigued buyers. The same goes for other popular NFTs.
Let’s talk about some basic terms and definitions related to NFTs.
What is an NFT?
An NFT is a digital token (unit of data) stored on the blockchain that is made to represent a real digital asset or artwork. Each NFT is unique and non-interchangeable, which means an NFT cannot be interchanged for another NFT. This is because no two NFTs are ever the same and each NFT has a different value than other NFTs.
NFTs are often made to present reproducible digital media assets such as images, videos, gifs, audio, etc. These digital content can be generally reproduced by anyone who has access to them, but owning an NFT associated with a particular digital file gives you complete ownership and rights to that particular file.
Other than the ability to seamlessly trade them online, NFTs also offer a certificate of ownership. This is a digital file stored on the blockchain containing information about the NFT’s ownership and other data.
What is an NFT marketplace? (How to buy/sell NFTs)
An NFT marketplace is the platform where people can auction, buy and sell NFTs. An artist looking to sell his/her digital artwork will first convert it into an NFT and then list it on a suitable NFT marketplace to auction and sell.
What makes NFTs so popular
Other than the fact that NFTs enable local artists to independently sell their digital artwork to buyers globally, one of the things that make NFTs so popular is their scarcity.
Because every NFT is unique, only a single person can take the credit to own it. The more people want it, the more is the popularity of an NFT, and the higher will be its value.
For instance, there are only 9999 Sharp Bunnies, and each NFT is unique from the other. So, there will never be more than 9999 Sharp Bunnies owners ever. Though the NFT artwork can be copied and replicated, the ownership of an NFT is always unique.