What is NFT
Technology

What is NFT, and How Does It Work?

NFTs refers to a digital asset representing real-world items such as music, art, in-game objects, and videos. You can buy and sell them online, usually with cryptocurrency, and they are usually encoded with the same underlying software as most cryptos.

Even though NFTs have been in existence since 2014, they have gained popularity because they now represent an increasingly popular avenue for trading digital artworks. In 2021, the NFT market was worth a whopping $41 billion; this amount is almost similar to the whole value of the whole global fine art market. NFTs are usually special or among a very limited edition and have distinctive codes for their identification. Thus, they create digital undersupply.

How Does NFT Work?

The existence of NFTs relies on blockchain technology, a decentralized ledger of transactions. You may be aware that blockchain technology is the foundation of cryptocurrencies. NFTs are particularly held on the Ethereum blockchain, though other blockchain platforms can also support them.

NFTs are usually “minted” or built from digital items, which are a representation of both physical and non-physical items, such as GIFs, collectibles, graphic art, video game skins, virtual avatars, designer sneakers, and music. Surprisingly, even tweet counts as Twitter co-founder and former CEO Jack Dorsey’s first tweet was sold for over $2.9 million. Thus, NFTs function just like tangible collector’s items, yet just digital. 

How Do I Buy NFTs?

If you are yearning to start collecting NFTs, you’ll need to get yourself some crucial items. The first step involves opening up a digital wallet that will allow you to store cryptocurrencies and NFTs. Therefore, you will need to get yourself some cryptocurrency, such as Ether; however, this depends on your NFT provider; some may accept different crypto. Crypto can be bought using credit cards on platforms such as eToro, Kraken, and Coinbase, including Robinhood and PayPal. Keep in mind fees, as a majority of platforms charge a percentage when you purchase crypto. If you are here after searching for Cheap NFTs to buy, then you must check above exchanges.

How Can I Use NFTs?

NFTs and blockchain technology have provided content creators and artists a special opportunity of monetizing their commodities. For instance, the idea that it was necessary to go to auction houses or gallery stores in order to sell art is long gone. Thus, artists can directly sell their art to consumers as an NFT, which increases their profit margins. Moreover, artists can put in place royalty measures where they will be getting a portion of the sales each time their art is bought by a new buyer. This feature has become attractive because artists were often left out after selling their art to the first buyer.

As a buyer, NFTs, just like classical art purchases, allow you to monetarily support your favorite artists. As an NFT owner, you will have basic usage right such as being able to use the image as your social media profile picture, including the bragging right of owning such a piece of art. As a collector, NFTs can function just as other speculative assets, which are bought in the hopes of selling them for profit in the future.

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