NFT Explained. How Does This Technology Work?

You probably have heard about NFT (Non-Fungible Token) from a news source, and you may google it and get to know some NFTs are sold for millions of US dollars. What actually is NFT?

An NFT is a type of tradable digital asset which uses blockchain to record the ownership of assets. These digital assets can be bought, sold and traded between cryptocurrency wallets, and can tokenize things like art, collectibles and even real estate.

While NFTs have been around for a few years. The NFT craze is not only limited to world-known Hollywood celebrities like Justin Bieber, Paris Hilton who have created their own NFTs, but global brands such as Adidas, McDonalds, Walt Disney, and many more are rapidly jumping onto the bandwagon.

NFT Explained – the Difference Between NFT and Cryptocurrency

NFT stands for non-fungible token. It is generally built using the same kind of programming as cryptocurrency such as Bitcoin or Ethereum, but that is where the similarity ends.

Each token of NFT is “non-fungible”, which means that it is unique and irreplaceable, therefore making it impossible for one-fungible token to be equal to another. In addition, each NFT has a digital signature that makes it impossible for the NFTs to be equal. For example, one NBA Top Shot clip is not the same as EVERYDAYS simply because they are both NFTs.

On the contrary, physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They are also equal in value, which means that one US dollar is always worth another US dollar; one Bitcoin is always equal to another Bitcoin. The fungibility of cryptocurrency makes it a trusted means of conducting transactions on the blockchain.

How Much Does NFT Worth?

NFT, like some of the greatest paintings in the world, can be worth a fortune. The value of NFTs is connected to supply and demand. Below are a few other factors that influence the value of NFTs:

1. Rarity:

While some companies release hundreds of same digital art pieces for purchase, and the rarest release only one unique piece. It is obvious the latter one is worth higher because of the rarity reason.

2. Vintage: Just like a bottle of fine wine, an NFT can be appreciated over time. For example, many early projects are worth impressive amounts now.

3. Reputation: NFTs released or promoted by well-known creators and popular communities are worth more than those from obscure artists. A song by Lady Gaga, for example, is far more popular and valuable than a new single from an unknown artist.

Where to Buy NFTs?

Since NFTs exist in digital format, everyone can buy or sell NFTs online as there is no production or physical delivery available.

There are several types of NFT marketplaces suitable for articles, collectors and gaming fans. They vary in subject, format and size:

  • Open NFT marketplaces
  • Collectibles NFT marketplaces
  • Curated NFT marketplaces
  • Games NFT marketplaces

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