NFTs are something you may have heard of lately in the news or online, but are unsure of what exactly they are or how they work. We’ve put together an all-inclusive guide to NFTs, to teach you a bit more about what they are, what they’re used for, how they work and where you can purchase them.
What are NFTs?
NFTs, or ‘non-fungible tokens’ are collectible digital assets that hold value in the form of cryptocurrency. These digital assets are issued on a Ethereum blockchain. Think of them as rare collectibles like signed baseball cards, original paintings or limited edition clothing – value holding investments.
Unlike Bitcoin, NFTs are unique and non-fungible, meaning that it can’t be exchanged like-for-like. You might be wondering what makes NFTs different to other cryptocurrencies. Well, NFTs store an increased amount of information, elevating it above pure currency. For this reason, NFTs can be introduced to any and all spheres of trade.
There are a number of different types of NFTs, that exist as MP3 music files, JPG digital art, videos, GIFs and games to name a few. Essentially, NFTs take the form of digital assets that hold value. Rather than holding onto a physical item that holds great value, you’ll be in possession of a PDF or JPG file. Because of the value they hold, they can be bought, sold and bid on just like physical assets. In addition, the value of these objects are set by both demand and the market. As I’m sure you’ve wondered, yes there are copies of NFTs on the market, however they’re of a much lesser value than originals of course.
Authentic & Unique
One undeniable trait of NFTs, is their authenticity. NFTs can be authenticated using a unique number. This also allows for different items to be distinguishable from one another. Upon purchasing an NFT you’ll be given a serial number that acts as a token ID. This token ID is then stored on the blockchain. Similar to a barcode, the NFT number correlates with the item’s specifications and other related information. For example, what it looks like, any distinguishing qualities, the creator and organization from which it originates.
Unlike how tangible rare collectible are paired with a certificate of authenticity, NFTs are the certificates of authenticity. This is the case because the the creation process and/or smart contracts, are available for public viewing.
Although NFTs can be digital artworks, they can also be digital codes to open doors or rare concert tickets. Essentially, NFTs are digital contracts of ownership. The tokens stored on the blockchain that we mentioned earlier prove that a certain digital asset belongs to someone.
The explosion of digital collectibles in 2021 can be attributed to collectibles like Topps GPK, CryptoKitties and CryptoPunks. Often, ads and marketing campaigns employ NFTs as sign up bait, where users can purchase NFTs.
Where can I purchase NFT tokens
When it comes to purchasing NFT tokens, there are a great deal of options. You can select your platform of choice according to what you’re looking to buy. There are a number of sites that sell a wide selection of generalized items but there are also sites that sell specific items, such as baseball cards or digital art. Due to a rise in NFT demand, days of ‘drops’ are carried out in which batches of items are released for sale to the public.
When purchasing, you’ll need to ensure you have a wallet specific to your chosen platform that holds enough cryptocurrency. The most common currency is Ethereum based tokens that can be used to purchase assets on the market. We’d advise getting a crypto exchange account such as Binance or Bitfinex if you’re a beginner. Once you’ve carried out this process and funded your account, purchasing from markets is incredibly simple.
Here’s a few of our favourite sites that you can purchase NFTs from:
What are they used for?
Just like regular real estate, virtual real estate exists online too. There are a great number of options when it comes to buying and selling digital land. Similarly to what we mentioned before, NFTs themselves act as ownership contracts to a specific, unique piece of virtual land. Examples include, The Sandbox and Decentraland.
The world of virtual land is much greater and more intricate than one would assume. Just 6 years ago, Decentraland raised a total of $26,000,000 in just a single hour as they promised a digital world where users could purchase land as well as build on it. To this day, Decentraland has grown tremendously – now opening up virtual games, art galleries and fashion stores!
Businesses are now able to earn real money via transactions in the virtual world. Given the exponential rise in demand for virtual land, other platforms are beginning to introduce similar offerings. Each piece or plot of virtual land is an individual NFT, of which the price will constantly fluctuate and vary according to the market. In addition to this, prices of virtual land are also dependent on location, traffic and spaciousness. These traits are all considered by buyers when purchasing virtual real estate.
Art & Music
The dawn of the virtual artwork came as an extremely pleasant surprise to digital artists in the creative world. For some time, digital artists have struggled to promote their work and earn a living. Now, a whole new world has opened up! Just like real estate, virtual art is now also available for purchase. Artists now have the capabilities to sell their art digitally, as well as display their art in virtual galleries for others to view – an entirely new way to sell, buy and discover new art.
Here’s a list of some of our favourite art-related virtual marketplaces:
Using these platforms, artists can sell their art or place it up for auction where visitors can either buy or bid on items. Perhaps the best feature of the virtual world of NFTs is the unlimited possibilities! If you’re an artist that owns virtual houses, you can display your art in a gallery setup on the walls of your house, or maybe even rent out that space to other artists! Keep an eye on platforms such as SuperRare and Rarible who are growing at a quick pace.
Similar to the art world, the music world is just as difficult to navigate through. It can be incredibly challenging to not only get your music out there but to get it to do well. The world of NFTs opened up a great option for musicians who can now release their own music, promote it and receive the majority of the commission. By carrying out the process this way, musicians can have full creative and business control over their music, a rarity in the real music industry.
Although the music side of NFTs are not yet as influential as mega-platforms like Apple Music and Spotify among others, NFTs are still making waves in the music industry as well-known musicians are starting to invest in it by selling NFT collectibles. Artists doing so include Kings of Leon and DeadMau5. Kings of Leon have taken an even deeper plunge, selling limited edition artworks, concert tickets, backstage passes and an upcoming NFT album.
NFTs have also made their mark within the gaming world. Now, users can make in-game purchase in different games to then be bought and sold by the players themselves. NFT game items include special weapons, outfits, skins and avatars. Blockchain enables gamers to earn money while doing what they love, bringing more power to the gamers themselves.
Certain assets can be assigned to individual users in the form of NFTs, that can be bid on, auctioned off, bought or sold. The blockchain gaming market is still very much on the rise and is yet to reach its peak due to difficulties obtaining the correct cryptocurrency, however, make sure to keep an eye out for it’s almost guaranteed growth.
Currently on beta, nbatopshot is one of the most popular places to buy one of the oldest collectables in a digital form: digital trading cards.
Instead of buying a pack with physical cards with a certain player on it, you can buy, sell and trade NBA highlights. Each card has an unique serial number and are published in a certain amount. There are common cards, rare cards, legendary cards and ultimate cards.
Packs with these special moments are dropped at certain moments. Before the drop, an email goes out stating that the pack has been dropped and is now available. You’ll also receive a link to be added to the waiting list. At the time of the last drop, there were 15.000 packs available and over 300,000 people in line, hoping to purchase a deck.
The cards can be traded in the marketplace. In February of 2021, the LeBron James dunk card featured below with serial number 29, sold for $208,000. Currently, it’s now available for resale at $250,000.
Is now a good time to get Into NFTs?
The rise of non-fungible tokens is far from over, with prominent celebrities and brands delving into the virtual world of digital assets. Analytical research anticipates that the NFT market will surpass $1.3 billion by the end of this year, as people are beginning to flood the market.
Grimes – famous singer and wife of Elon Musk – Shawn Mendez and UFC have all made recent investments in NFTs, with Grimes racking up $6 million by selling her art.
With an increasing rate of platforms and alternative blockchains competing to provide better NFT services, it has never been a better time to get involved! Want to know what NFTs are trending? Make sure to read our article about Top NFT Collectibles.
Where to buy
Getting started with NFTs can be quite complicated at first if you have no experience with cryptocurrency. If you don’t have any cryptocurrency yet then you can buy them at Hotbit, Binance or Bitfinex. The second step is to get a wallet, like Metamask, to transfer the cryptocurrency to.
Metamask is compatible with most of the NFT-sites mentioned in this article.
Once you’ve transferred the cryptocurrency to your wallet, you can connect it to for example OpenSea and start buying, or selling your first NFT artwork!