Everything You Need to Know About NFTs Before Buying One
NFTs are all the rage yet the average person is understandably unaware of what these digital artforms are really all about. If you don’t completely understand NFTs, don’t fret. We’ve got you covered with our NFT guide below.
NFT Basics
NFTs are non-fungible tokens, meaning they are highly unique pieces of digital art. NFTs empower buyers to own original digital files in the same manner that one owns a painting or another form of traditional art.
The logic in buying an NFT is the same as that applied to buying a sports trading card. Owning digital art is satisfying in and of itself yet there is also an inherent appeal in the prospect of the NFT’s value skyrocketing in the weeks, months, years and decades ahead.
Though millions of NFTs exist, some are more valuable than others. There is also the potential for NFTs of all types to significantly increase in value as time progresses, regardless of their idiosyncratic aesthetic elements. Aside from images, NFTs are also available in the form of music and videos.
Some NFTs Are Worth A Considerable Amount Of Money
There is a common misconception that NFTs are worth little simply because there are so many in existence. However, more baseball cards exist than NFTs and some baseball cards are worth hundreds of thousands of dollars.
The top NFTs are selling for more than the most valuable sports cards. In fact, one NFT created by the digital artist Beeple sold for nearly $70 million earlier this past spring. Plenty of other NFTs have sold for hundreds of thousands of dollars.
The NFT Buying, Selling And Trading Process
Purchase an NFT on an NFT marketplace such as OpenSea and you will own an original digital piece of art. You can hold, trade or sell the NFT as desired after purchase. However, there is a good chance the NFT will increase in value as it is idiosyncratic, meaning non-fungible.
NFTs can also be traded for other items within the same category without value alterations. The blockchain is used to record the buying, selling and trading of NFTs, ensuring those transactions are backed by the utmost digital security.
NFTs Are Not The Same As Cryptocurrency
If you are new to this space, you are likely wondering what role, if any, that cryptocurrency plays in NFTs. The blockchain supports both crypto and NFTs yet the two have substantive differences. Bitcoins are not different from one another. NFTs are completely distinct entities, each with their own unique aesthetics and values. Cryptocurrency is used to buy these unique pieces of digital art.
NFT Creation
NFTs are made through a minting process. The minting of NFTs creates a representation of the file on the blockchain network. Such distributed networks maintain immutable records tracking the buying and selling of the asset as well as its current owner. Ethereum is the primary network used for these digital artworks. Cardano and Solana are also used.
The minting of the NFT sets the stage for its subsequent purchase, sale or trade. It is important to note that if someone copies the underlying file of the NFT, the ownership will not change unless the current owner allows for it to change. It is impossible for an NFT to be duplicated and sold or traded under the guise that it is the same as the original NFT.
NFTs Might Be Solid Investments
Though no one can predict the future, it is widely assumed that NFTs will appreciate in value across posterity. The age cohorts most likely to be interested in purchasing and trading NFTs are millennials and Generation Z. The individuals in these age cohorts are entering the prime of their working years, meaning they will have ample discretionary income available to purchase NFTs of all different varieties. Add in the fact that NFTs will be a significant component of the Metaverse set to launch as early as next year and there is even more reason to start investing in these digital artworks.
