An NFT refers to a Non-fungible Token. In simple terms, an NFT is a tool that a digital artist can use to sign their work and ensure it’s never stolen or plagiarized. It is a digital indication of any item, including collectible cards, virtual lands, and digital art pieces.
NFT art incorporates digital art, music, videos, gifs, video games, memes, and much more. It registers the distinctive ownership of a distinct artwork on the decentralized ledger network known as blockchain technology. Several artists, celebrities, and digital creators capitalize on the NFT trend. They make their own NFT’s and sell them across various marketplaces, making a profit.
Like every other investment opportunity, an NFT investment also has risk, reward, and potential. It has some demerits and advantages too. Before you decide to put your money into an NFT, you need to answer the big question – is it worth it?
NFT’s are on the rise, and celebrities and other influential people widely use them. They are tokens of a digital asset. If you are familiar with what collectibles are or have owned one in the past, it’s best to think of NFTs as digital collectibles. It can be a painting or art, a video, an object with historical value, a music album, or a digital representation of a real-world asset such as real estate or property. Interestingly, even memes can be considered as an NFT!
What’s unique about this, and how does it benefit me?
The point to note here is that you are the sole owner when you create or trade an NFT. You will be the only individual who will ever own any piece of NFT that you will purchase.
Unlike Bitcoin or other available cryptocurrencies, NFTs aren’t directly interchangeable. Yet, a price tag for each asset means you may ultimately get the chance to sell it to someone at a higher price if anyone else is willing to pay and wants the same item. So there’s the brownie point.
The Market for NFT is a highly speculative market driven by scarcity and, for a few – the fear of missing out. There is no guarantee the NFT you buy will appreciate with time. But if you want to support an independent artist and are okay with bearing a few losses, they can be a fine collectible for your digital library.
So, how exactly does one buy an NFT?
- As most marketplace currently use the Ethereum network, you need to create an Ethereum Wallet, e.g. Metamask or an Ether Wallet. If the token you want to purchase is not on the Ethereum network, install a wallet native to the project’s blockchain.
- You will also need to set up a good crypto wallet compatible with Ethereum. A crypto wallet is your digital address where you can store your cryptocurrencies.
- Visit your preferred NFT marketplace. Popular marketplaces include Rarible, SuperRare, and Foundation.
- Sign Up If you have a sign-up or login Button, click and accept the prompt to connect your wallet. Connect your wallet to the marketplace. Most marketplaces have a simple ‘Connect wallet’ option available on the platform.
- Once that’s done, approve the signature transaction, and provide a username and email address for the account.
- Click Market and browse through the art collection to find one you like.
- Select the product you’re looking for and Make an Offer or buy now.
- Enter the bid amount you wish to trade in and approve the transaction.
- Your purchase will be locked until your bid is approved as the highest. If the item has a fixed price, the trade is settled when you click Proceed to Payment.
- After a successful bid, you will be able to complete the transaction, and the necessary amount will be debited from your wallet. Remember that you may also have to pay a transaction fee to the marketplace, but the price will depend on the Market.
How to identify an authentic NFT?
Since NFTs live on the blockchain and exchanged items are digital goods, it is easy to verify that the item you purchase is authentic. Each purchase has a transaction hash, including the address of the token’s creator and that of bidders and the eventual buyer.
There are several tools like Etherscan.io or other native blockchain explorers, through which one can even trace NFTs that have been resold severally back to the original creator’s address.
In a nutshell:
Non-fungible tokens are genuinely incredible, and they are taking over how we purchase and trade in digital collectibles.
Before putting money on the table, each prospective investor would find it more suitable to understand the NFT landscape. There is a lot of money to be made and lost through an NFT, and doing careful and introspective research is the only antidote to avoid ending up on the losing side.
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