In this era of the digital age where every day a new technology makes the headlines, with new digital currencies such as Bitcoin, Ethereum, and many more grabbing the spotlight, it is difficult to keep a tab of the sea storms. Therefore, we are here to keep the junk of the box and deliver quality content with verified factual.
The latest brainstorm of the season is NFTs and don't be surprised when we tell you that an NFT created by an artist named Beeple sold his digital artwork called “Beeple’s Everyday: the First 5000 days” was sold for a whopping $69.3 Million in an auction. What does an NFT look like? Well, keep your expectations low, as NFTs look just like normal JPEG images that are saved onto your devices.
So, what is the buzz all about, and what makes NFTs valuable in the first place? To answer all the questions of the bizarre nature of NFT and how you can most probably profit from it read on!
What are NFTs?
NFTs stands for non-fungible tokens which act as a digital version of artworks.
It is the newest way of purchasing and selling your artwork online. It's like buying Mona Lisa’s painting just the digital version of it. NFTs provide a means to own the artwork and profit from future transactions. Frenzy collectors of art have been stocking exclusive and limited-time digital art and artists found a new way to sell their art digitally. Artists can also take a fair share of transactions from the future selling of their digital art.
A unique and non-interchangeable data unit that is stored on a digital ledger. These digital ledgers are democratized and hence can give utmost security backed up with blockchain. NFTs can be anything that can be digitized. Starting from images, videos, to even audio clips. NFTs are more of the representation of the object rather than the object itself.
Why are NFTs valuable?
NFTs are non-fungible and non-interchangeable, meaning you can own a bunch of bitcoins and those bitcoins can be again easily broken down into tiny pieces but when it comes to NFTs they cannot be exchanged into anything else nor they can be broken down into tiny pieces. Each NFT is unique with blockchain technology in its backend that provides digital proof of ownership publicly.
Some of the silent features of NFTs are:
- Indivisibility: as mentioned before, NFTs are not divisible or they cannot be broken down into anything smaller or even exchanged. One of the analogies is when you buy a plane ticket, you cannot break it down and use it for two people similarly, you cannot break NFT into smaller tokens, and hence you must buy the whole NFT so that you can have complete ownership over the item.
- Uniqueness: each NFT created is a unique piece of a digital asset in the collector's tribe. An NFT cannot be exchanged for even anything similar. For example, you can exchange or get 10 notes in exchange for 100 notes which represents the same, but not with NFTs. It’s like you cannot possibly exchange a vintage artifact for anything similar.
- Ownership: another aspect of NFTs in the fact that NFTs can be sold and owned by only a single person at a time giving them reliability. The creators of NFT hold the private key that is used to transfer any control of NFTs and ownership. Owners can enjoy ownership privileges.
- Authenticity: since the NFTs are placed in the world of blockchain and governed by a democratized system of checks and balances, NFT owners and creators can verify their existence anywhere in the world. It is just a click away to find all the history of the given NFT at any given time. The cryptocurrency ensures that the value of the authenticity remains intact.
- Rarity: the value of an NFT depends upon how rare the digital asset is. If it is a limited edition piece or something vintage or geographically important. Such factors play a very vital role in setting the value of the NFT. For example, if tickets to an exclusive event are sold as an NFT and the organizer has issued only 100 such NFT tickets then the auction for such tickets could be competitive while if the issued tickets are 5000 in number then its value reduces drastically. Hence, more rare the item higher its value in the NFT world
- Digital wallets: last but not the least, the process of paying an NFT is quite different. You won’t be able to buy the NFT with your regular money in any currency and for you to buy NFT you need a cryptocurrency preferably Ethereum which is stored in a digital wallet that supports blockchain systems. Such purchases and transactions themselves +make NFTs a unique digital asset.
To keep it clear, NFTs are like a present gold asset that has a value that is not stagnant and can be treated as an investment. Though some of the critical thinkers believe that NFTs are a bubble ready to be bust with every new opportunity comes a risk factor and one who takes calculated risks wins the game of financial management.
You would like to have a certain amount of gold as a safe deposit for future use and financial crises because gold has a value of its own. Similarly, NFTS which are any form of digital asset can act like a safe deposit where you can sell the NFT for a profit in the future if the value and rarity of the item increase.
These systems are democratized, meaning no single entity or organization controls or manages the working systems of NFTs hence providing an extra layer of value assurance.
Why are some NFTs worth millions?
You might still be wondering, why would something as a JPEG that can be right-clicked downloaded right away be sold for million dollars.
The answer lies in the ownership of the given digital asset. Here, with the purchase of NFT in form of any digital art, you are now the owner of the given item.
Another crucial factor that makes NFT worth is the fact that you can trace back the history of the NFT at any given time and moment. It is like seeing the Mona Lisa’s painting and having Leonardo Da Vinci standing beside giving a testimonial of it.
The value of the NFT is largely governed and controlled by the rarity and scarcity of the asset. If the digital asset is rare then the value will increase simultaneously, whereas if the digital asset is commonly available by multiple platforms then, the value of the NFT will drop due to the competition between the platforms on who will give in the least price.
Moreover, NFT is secure and cannot be broken thanks to blockchain technology and online ledger directories. These techniques make the decryption and dismantling of the ownership of the asset quite impossible.
The Value of Digital Fine Art
NFTs are the most versatile form of digital assets. Your NFT could even be virtual real estate, virtual worlds, fashion, and much more.
Research shows that 83% of millennials prefer businesses that are aligned with their values.
One of the LIVE examples could be the NFT created by Taco Bell for the Live Mas Scholarship, all their NFTs were sold under 30 minutes. Another little-known Chinese virtual sneaker brand called RTFKT designed an NFT sneaker for the Chinese New Year and put it up for auction. The NFT was sold for $28,000 keeping in mind that the sneakers cannot be touched let alone wear them.
How can you purchase NFT tokens?
So, you have decided to dive right into the action and be a part of the bandwagon but the sea of available and options and information have overwhelmed and left you in frenzy. No worries, we got you covered with the simplest steps:
- First and foremost, get yourself a digital wallet where you can store your digital money. Add the payment method that you will be using
- Second, buy a bunch of cryptocurrencies such as Bitcoin or Ethereum which is used for purchasing the NFT tokens.
- Go to NFT marketplaces such as OpenSea to surf through available digital assets.
- Connect your digital wallet with the marketplace and place your order.