Everything you need to know about NFTs

If you’re reading this it means you’ve been hearing a lot about NFTs and you’re curious to discover more about this revolution. Don’t worry, we’ve got you covered! Here’s everything you need to know about NFTs.

So, what is an NFT?

An NFT (Non Fungible Token) is a unique digital asset embedded on a blockchain, that can be directly related to real world objects such as art, music, in-game items and videos. NFTs are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptocurrencies. In the near future, NFTs could take the shape of airplane tickets or event access passes as they are personal, unique, easy to use and recognize.

What is a blockchain?

A blockchain is a digital ledger that records transactions and is maintained by a network of computers, using a technology that makes it very difficult to be subject to attacks, hacks or alteration. Essentially, a blockchain is a system of recording information in a public and transparent way, offering a secure way for individuals to make transactions directly with one another, without a third party involved like a government or bank.

All of that sounds great, but how do NFTs differ from cryptocurrency?

As mentioned above, NFT stands for „non fungible token”, which means that an NFT will always be unique and cannot be replaced by another unique NFT. To understand the difference between a “fungible token” and a “non fungible token”, let’s use Bitcoin as an example: 1 Bitcoin can be exchanged for 1 Bitcoin and it will still keep all of its qualities. 1 Bitcoin is 1 Bitcoin, just as 1 USD is 1 USD = Fungible Tokens. The ability to exchange one given item for another, and for it to keep its qualities, is what defines the concept of fungibility.

With NFTs, the previously mentioned situation is not applicable.

A non fungible token will hold unique traits and qualities which are specific only to that non fungible token. Paintings are a good example of non fungible tokens. One cannot exchange the Mona Lisa for another one, as there is only one Mona Lisa that has unique traits. NFTs are one of a kind assets defined by unique identifying codes, with built in metadata that makes them irreplaceable, thus creating digital scarcity.

We could say that NFTs are also digital collectible items. Instead of getting a physical representation of any of the above, one gets the unique digital file, together with exclusive ownership rights. The owner will keep the NFT in their own digital wallet, and they will be able to sell it or hold it for as long as they want.

Are NFTs just collectible digital assets?

The answer is: it depends. The use cases for NFTs are many and they go far beyond collectible digital assets. Here’s a list of just some of the sectors this technology is being used in different ways:

• Music
• Research Funding
• Gaming
• Branding
• Marketing
• Science
• Social Media
• Investments
• Sports
• DeFi
• Charity

All of the examples above represent just a short list of the many different domains that are currently adapting to the NFT technology. As the NFT technology is constantly evolving, there will be even more possible ways of using NFTs in the future.

How do NFTs work?

An NFT is created when it’s minted on the blockchain. The term ‘minting’ refers to validating and recording the information on the blockchain. The minting process creates authenticity and uniqueness to a range of different tangible and intangible items such as: graphic art, videos, collectibles, music. virtual avatars, GIFs and so on.

How can someone prove they own an NFT?

The uniqueness of the NFT technology and Blockchain transparency play an essential role in proving ownership of the non fungible tokens. NFTs are original by definition and their ownership is easily traceable on the web, making it simple to see who owns what. The wallets in which the NFTs are stored have built-in authentication systems which also make it possible for owners to access their NFTs at any time. Furthermore, the proof of ownership over an NFT, or, in other words, the verification of the transaction on the blockchain, assures that the owners are recognized as “the owner” of “the specific NFT”.

I understand all that, but why would I need an NFT?

NFTs are a great way to become part of something bigger, like a community that shares the same values and principles. Through the use of NFTs, a digital space can be created and individuals can come together and share thoughts, ideas, inspire one another and build amazing things.

Moreover, NFTs have solved the long-standing issue of creating decentralized digital collectibility and ownership in a “copy-paste” universe. The blockchain technology makes it very easy to verify ownership of a given object, and it simplifies the transfer of that specific item from one user to another.

How do I buy an NFT? Here are 3 easy steps:

1st STEP – Get a digital wallet

Firstly, you are going to need a hot wallet which is like a normal wallet, but for crypto (e.g.: MetaMask, Trust Wallet, Coinbase Wallet). Download it on your phone and laptop, and start setting it up. Pro Tip: write your secret words on a piece of paper and never lose it!

2nd STEP – Buy cryptocurrency

After setting up your digital wallet, you will need to own some cryptocurrency to be able to acquire your NFTs. This can vary depending on what type of currency the NFT creator you want to buy from accepts. You can buy the cryptocurrency from platforms such as Coinbase or Binance.

3rd STEP – Find a marketplace OR go to an NFT creator website

After you own a wallet with cryptocurrency in it, you will need to head to either an NFT marketplace (such as Opensea) to buy existing NFTs, or engage in an upcoming project and participate in the minting process.

Congrats, you own an NFT! Now what?

After you have acquired your NFT, either by participating in the minting process or directly on a secondary market, you will be able to see your NFT in your digital wallet. Sit down and enjoy, life is beautiful, you now have your own unique NFT that is completely yours to hold or re-sell. It’s up to you what you choose to do with it!

Let’s recap everything you need to know about NFTs:

NFTs (Non Fungible Tokens) are far more than ‘just expensive pictures on the internet’. They represent useful pieces of technology that offer multiple use cases for their owner. NFTs solve the problem of ownership, they facilitate monetization and create amazing communities around them. Whether you’re buying NFTs for trading, collecting or to gain membership privileges in certain communities, you’re being part of a world changing phenomenon.

INDEX:

NFT 

A “Non fungible token” is a unique digital asset embedded on a blockchain, that can be directly related to real-world objects or simply represent digital files.

BLOCKCHAIN

A system of recording information in a public and transparent way, offering a secure way for individuals to make transactions directly with one another, without the involvement of a third party. 

MINTING

The process of creation of an NFT on a given blockchain. By minting an NFT, the token becomes part of a specific blockchain as a code, thus being permanently recorded and recognized by everyone else.

DIGITAL WALLET

A digital wallet (ex. Metamask) is simply a wallet designed to hold NFTs or cryptocurrencies. There are 2 types of digital wallets: hot wallets (digital, online wallet)  and cold wallets (hardware wallet, pshically in your possesion).