What is a NFT?

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What is a NFT?

What is a NFT?

What is a NFT?

Non-Fungible Tokens (NFT), have become increasingly popular in recent days as they are “one-of-a-kind” assets that can be traded like any other property in the digital world. They have no tangible form of their own. So, what is a NFT and how to own it?

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What is a NFT?

NFT, which is short form for Non-Fungible Token, is a content unit on digital platform called blockchain, which symbolizes a unique digital content and therefore cannot replace other visual and audio content. NFT content may represent original and creative content, which may include audio, art, video, and audiovisual elements from video games. These digital contents can be copied indefinitely, but NFTs representing digital contents are tracked on the blockchain and provide proof of ownership to purchasers.

Non-Fungible Tokens are usually produced on the “Ethereum” blockchain, which is an open source, decentralized computing platform that offers smart contract functionality. However, other blockchains such as “Flow” and “Tezos” can also implement their own versions of NFT.

How does NFT work?

NFT is a unit of data that represents original digital content, stored on the blockchain. Unlike cryptocurrencies like Bitcoin and many utilities or networks, NTF contents are a cryptographic token.

NFT is created by uploading a digital art content to auction markets offered on digital platforms such as Rarible, Opensea or KnownOrigin. It creates a copy of the content recorded on the blockchain as an NFT that can be bought and resold in cryptocurrencies.

An artist can sell the NFT representing a work if he wishes, as well as hold the copyright to the artist’s work and create even more NFTs of the same work of art. The purchaser of Non-Fungible Tokens does not receive exclusive access to the originally produced content by the artist.

The person who uploads a work to the digital ledger (blockchain) as NFT does not need to prove that he is the original artist of the Non-Fungible Token. There has been frequent use of art for NFTs in the past, even without the consent of the content creators.

How to own a NFT?

Can anyone have an NFT? Yes, maybe. There are platforms where NFTs are displayed and bought. You can also own a NFT on these platforms, under the conditions determined by the person producing the NFTs you want, with the options of auction or direct purchase. When the purchase is complete, NFT transfers from the manufacturer’s wallet to yours. If you wish, you can resell the Non-Fungible Tokens you have purchased through the marketplace applications where NFT sales are made.

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How are NFTs manufactured?

Non-Fungible Tokens are created by developers of a blockchain called Ethereum and are produced according to ERC-721 or ERC-1155 token standards. There are platforms that allow transactions to be carried out easily so that users are not lost in the technical world of the blockchain.

The only thing required for Non-Fungible Token generation is a digital cryptocurrency wallet. After the digital content to be produced in NFT format is uploaded to the IPFS (InterPlanetary File System) system via these digital platforms, the parameters of the Non-Fungible Token that cannot be changed are determined.

After determining how many NFTs will be produced, the sale price, and how much share will be paid from the next sale, Non-Fungible Tokens are produced by paying the fee requested for the transaction of the blockchain network. Upon completion of the transaction, the Non-Fungible Tokens are transferred to the cryptocurrency wallet and recorded on the entire blockchain where production takes place.

Difference between NFT and other Cryptocurrency Coins

NFT is a digital asset that cannot be broken down and reproduced from the same. While you can split and sell assets such as Bitcoin and Ether, or exchange them for a currency of the same type, Non-Fungible Token, a digital private asset, cannot be exchanged for a token and cannot be split. The value of NFT is determined by the investor.

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Is NFT used for Investment?

NFTs are slightly different from other cryptocurrencies by their design, and their value is determined by the person or investor who produces the work rather than the order board. If the subject of investment is interpreted through digital art, it is no different from investing in physical art. Similarly, parameters such as the value of an asset purchased as a collector’s item, how rare that asset is, age and cosmetics are important criteria in determining its value.

Non-Fungible Token is a collectible digital asset that, at its core, holds value as a cryptocurrency. Just as art was seen as an investment that holds value, so are NFTs now. We all know the queues that form in stores for the newest product of a very famous store. NFT is the new digital equivalent of these queues.

It is an obviously non-substitutable asset and has unique qualities that make it different from anything else in the same asset class. Just like a painting, a theater ticket, a house, a video game appearance, a trademark, or a CryptoKitty which was the first real use case to rise on the Ethereum blockchain in 2017.

NFT sales volume was $13.7 million in the first six months of 2020. In the first six months of 2021, this volume increased from $13.7 million to $2.5 billion, revealing its recent trend.

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