After Bitcoin and Blockchain, NFT is another word that has entered our lexicon. The buzzword is everywhere and people are wondering what is NFT and what is it for? Well, there really isn’t a one-line explanation. That’s why I bring you a full explanation about NFT, its use in digital art, and much more.
So without wasting time, let’s go and learn all about NFT (Non-Fungible Token) in detail. Here I have mentioned all the questions that people have in mind regarding NFTs.
First of all, let me give you a clear cut definition of NFT and what it stands for. NFT is the acronym for Non-fungible Token. Fungible by its very definition means something that is mutually interchangeable. For example, you can exchange a 10 dollar bill with another 10 dollar bill or exchange it with two 5 dollar bills. In either case, the value remains the same and you will have no problem exchanging the money. Here, money is a fungible object because it can be exchanged without its value decreasing.
What is NFT?
So when I say Non-Fungible, it means something that cannot be exchanged with an analogous item of similar value. To give you a simple example, if you want to replace the painting of the Mona Lisa kept in the Louvre with another print of the same image, will it be the same? And, more importantly, will it have the same value? The answer is no. Here, the incomparable Mona Lisa painting is a Non-fungible item that cannot be exchanged with another item with an identical appearance.
Uniqueness is the key here. A Non-fungible object is therefore something unique and authentic. Something that has value for its authenticity. Now we come to the token part. A token is a 40-digit string of words and numbers that contains the information of the original artist who created the masterpiece, the current owner of the item (there can only be one) and the current price of the item. This information storage is coupled with Blockchain technology which cannot be altered by any means due to its decentralized system.
Finally, when you put the three words together, NFT stands for an incorruptible token that holds information about the ownership of a unique and genuine item. The NFT is essentially a certificate of ownership or authenticity. This is the general definition of an NFT, but if you want to get the full idea of NFTs, you need to understand the concept using digital art as an example, which I covered in the next section.
What is the use of NFTs in digital art?
Many must be wondering what is the use of NFT in digital art and why is it making so much noise? Well, as I explained in the previous section, the NFT is a signature of authenticity and it provides that authentic stamp of approval on the web when it comes to digital arts. We all know that in today’s world anything can be doctored and people can pass off other people’s work as their own. In fact, on the web, it is virtually impossible to find the original creator of an artwork and this is where NFTs come in. NFTs aim to bring the art collection into the mainstream. digital age by offering all-digital works of art sold as NFTs.
NFTs allow digital creators to put their works into the public domain without having to worry about proving their ownership or authenticity. Digital artists can generate an NFT for their original work and auction it off to another person while retaining information about the original creator, current owner, and current value. The best part of NFT is that every time digital art is sold to another person, a share of the value will be transferred to the original creator. The NFT is therefore an excellent proposition for digital artists who want to earn money from their works..
The beauty of NFT is that it is no longer limited to paintings, but people are now using it to buy digital collectibles of all kinds. For example, Jack Dorsey launched an NFT auction on his first tweet, which is currently worth $2.5 million.
What is the link between Blockchain and NFT?
I explained above that Blockchain technology is the foundation on which NFT is based. We already know that Blockchain is infallible and that it is massively used in the management of several cryptocurrencies. Every transaction made by NFT is recorded in a public ledger, which means that the whole system is very transparent. Another aspect of this technology is that it creates a chain, which means everything is traceable back to the original creator.
One thing to note is that you can only buy NFTs with cryptocurrencies and in particular, Ethereum. Currently, Ethereum is the market leader in issuing and managing NFTs due to its early lead. However, some services also accept bitcoin to buy and sell them.
A Brief History of NFTs
Now that we have come to know the NFT in detail, let’s find out how it was created. First of all, the reason why Ethereum has a head start is that they are the ones who started this project with their new NFT blockchain system called ERC-721 in 2015. Subsequently, Ethereum brought ERC-1155 and advanced technology before Bitcoin and Flow could catch up.
In what was the first introduction of NFT to the masses, in 2017 Ethereum introduced a blockchain game called CryptoKitties. In this game, players could buy, collect, breed and sell virtual cats using Ether (Ethereum’s cryptocurrency). At the time, the top-selling cat was $117,712, which was mind-blowing. Taking a cue, Ethereum incorporated the NFT system into their cryptocurrency and now they are leading the market.
To give you some numbers, in 2018, NFT had a total market share of $50 million; in 2019 it reached around $150 million and in 2020 the NFT market ballooned to a whopping $338 million. Now, with the current boom, it’s anyone’s guess where the market will go from here.
The disadvantages of NFT
Although I have discussed the advantages of NFT, there are a few major disadvantages that you should keep in mind before investing in a digital collectible through NFT. First of all, it takes a huge amount of energy to generate and maintain the system, which makes it unsustainable and has a negative impact on the ecology. This is because, unlike cryptocurrencies, a non-fungible token runs on a proof-of-work blockchain which is less energy efficient. Anecdotally, expect GPU prices to increase further in the near future due to extreme mining.
Other than that, critics warn that NFT is a bubble, and people who buy a weird GIF or collect a rare music video at such a high cost are going to crumble. Experts say that rare paintings and collectibles do not retain their value solely because of their artistic character, but also because there is an established audience that wants to own and collect rare paintings or a work of art that no other person owns.
Experts point out that those who buy digital artwork don’t pay huge sums because they appreciate the art. Instead, they want to create a bubble to make money by reselling it at a higher price. It’s worth noting that the digital world doesn’t experience a shortage of artwork — unlike physical masterpieces — and prices will likely drop when the bubble bursts.
How to buy NFTs?
To buy an NFT, simply go to one of the NFT Marketplaces and make a purchase. However, there are some things you need to consider before making your first NFT purchase.
First, you need to make sure your cryptocurrency wallet is NFT-friendly. Next, you need to see which marketplace you want to buy from, as well as the cryptocurrency required to buy the NFT you are interested in. For example, while Ethereum (ETH) is one of the main players in NFTs, there are exchanges that also use other cryptocurrencies. So make sure you have enough of that currency to pay for the unique digital artwork you want.
Some of the NFT marketplaces you can check out include OpenSea, Rarible, Mintable, Nifty Gateway, etc.
How to sell NFTs?
If you own a piece of digital art or other content that you want to sell as NFT, you can also do so on NFT Marketplaces. Although the details may differ, all you need to do is upload your digital work, provide information about how it was created, and more. and set a price for your digital file.
Then your NFT can be bought by people looking to buy NFT. Every time your NFT is sold, you get paid for your work. Note, however, that some marketplaces charge a fee for hosting and selling your digital file. So be sure to read the fine print carefully before choosing the marketplace where you want to sell your NFT.
How to produce an NFT?
Crafting NFTs is pretty straightforward once you’ve completed the initial setup. The hardest part is understanding the rest of the process. Basically, you’ll need a wallet that can be used with NFTs, like MetaMask.
Once you’ve created your wallet, you can connect it to the platform you want to sell your art on (like OpenSea, Rarible, etc.). You can then upload your digital artwork to the platform, choose a price and start an auction.
However, things are slightly complicated. On Rarible, for example, you will have to pay a small fee to put your artwork up for sale. Next, you will need to pay an additional fee to have your artwork converted to NFT, then once your NFT is sold, Rarible will also charge you a commission, as well as a fee for transferring the cryptocurrency from the buyer’s wallet to the your.
Generally, creating a non-fungible token is easy, but selling it involves a bit of work. So make sure you have enough time before you start, and don’t set a price too low, otherwise you risk losing money by selling your works.
Verdict: Where is the NFT headed?
It was a comprehensive explanation about NFT and what it means for digital art and other digital collectibles. Although NFT adds a new dimension that can help verify authenticity, I think the current craze for owning an exorbitantly priced digital item is misplaced.
It’s a great technology that can have a huge impact on the music industry and other creative professions. It will surely reduce intermediaries and artists will be able to reap the benefits directly from consumers.
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What is NFT, how to buy, produce and sell it?
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