27 Dec
27Dec

Non-Fungible tokens or NFTs are the latest in the crypto space to go mainstream, And a huge contributor to NFTs gaining popularity and capturing the world's attention was after a group of NFTs by digital artist Beeple were sold for over $69 Million. This was in early march of 2021, This was also the first ever NFT artwork sale and still holds the record for the second most expensive piece of digital art ever sold. Before we go on lets know what NFTs are, And what makes them so valuable. You can Click Here To checkout the most expensive NFTs.

WHAT ARE NFTs ?

NFTs are digital and cryptographic assets, collectibles or tokens on a blockchain representing unique items. Just incase that was complicated to understand, In simple terms, Think of NFTs as a secure means of asserting ownership over a virtual asset. Unlike crypto coins, They are not divisible and cannot be exchanged or replaced.

Cryptocurrencies like Bitcoin or Ethereum are Fungible, This means they can be exchanged or traded one for another, i.e. You can trade 1 Ethereum (ETH) for another 1 ETH, And they are equal in value in every sense. Crypto assets being fungible makes them a secure and suitable medium for use in trading and transactions. But, This is not possible with NFTs, Because each token is irreplaceable and unique, making them not equal and different from each other.

HOW NFTs WORK.

   They exist on a blockchain, A blockchain is simply a distributed public ledger that records transactions, And you should know already blockchain make Cryptocurrency processes possible. NFTs represent real world objects that are tangible and intangible, and they are created or minted from digital objects.

NFTs include real world items like:

- Videos

- Art

- Music

- Virtual Real Estate/Lands

- Gifs

- Virtual Avatars and other collectibles.

Even tweets can be sold as an NFT. Jack Dorsey Twitter co-founder sold his first ever tweet as an NFT for over $2.9 Million. Most NFTs are part of the Ethereum(ETH) blockchain. ETH is actually the first Cryptocurrency that has supported NFTs trading and exchanges. Other cryptocurrencies like Solana also have their NFT platforms , But the vast majority of NFT tokens were built on Ethereum.

WHAT MAKES NFTs VALUABLE?

Presently NFTs can be regarded as assets because Blockchain technology has created opportunities for content creators and artist to mint and monetize their products. Artists and creators no longer have to rely on art galleries to sell their artworks, Instead, Sales can be made directly to customers globally as an NFT And they will receive royalties whenever these works are purchased by new owners.

This means as an artist you get to keep most of your profits without having to share with middlemen and you'll also earn percentages from sales and re-sales.

   Having said all these, NFTs like all assets are affected by demand and supply which are major and key market drivers for price. Lots of people: collectors, investors, gamers are usually prepared to pay lots of money for certain unique arts, virtual lands, Gifs and more. These has made NFTs valuable due to the potential for both owners and creators to make lots of money.

HOW TO BUY, SELL AND CREATE NFTs

   There are a few platforms or marketplaces where you can have access to create, Buy or Sell your NFTs like Opensea, Rarible, Solsea and more. Anyone can have access to creating or trading NFTs, Here are a few steps to doing this.

1. Create an Ethereum wallet like Metamask or math wallet.

2. Buy Some Ethereum from any of your favorite crypto exchange. You can do this easily through your credit card or paypal.

3. Connect your wallet to the NFT marketplace like Opensea.

4. Open the marketplace

5. Create, Buy and Sell your NFTs.

You must NOTE that the fees to purchase NFTs can be high most times , Some marketplaces charge a "Gas Fee" Think of a gas fee as a payment for the energy required to do a transaction on a blockchain network.

To SELL your NFT, You can simply upload your collectibles or art to the marketplace of your choice, Then Follow the instructions required to turn it to an NFT.

SHOULD YOU BUY NFTs ?

   Before diving into the NFT marketplace to search for assets you think will be valuable enough to own, You should understand that an NFTs value is based on the amount someone else is willing to pay for it. Therefore NFT prices is mostly  driven by Demand, NFTs are not influenced by fundamentals or other economic factors like it happens in the stock market. Buying an NFT is a personal decision, If you think a particular art piece for example is valuable enough, And you can sell it at a higher price in the future than the amount you bought it, Then you're free to go Long(BUY) on this Decision. But you must keep this important facts in mind, That:

- You may sell your NFT at a lower price if it's demand drops.

- Nobody may want it, Which means you can't sell.

- It may take a while, Months or more before you can find a buyer sometimes.

Virtual Real Estate.A common way to spot NFTs that are valuable and in demand is that, They sell in minutes and hours, If it takes, days, weeks or months before you can sell, The demand for that NFT asset may be low.

According to Forbes, NFT sales in the first quarter of 2021 has exceeded $2 Billion, We are still at the early stages of this technology, It's not going away anytime soon, So taking the time to learn about them may be worth it.

NFTs are the future of digital art for both artists and creators of all kinds. and they will even contribute more towards the development of the metaverse. As described earlier, NFTs are volatile like crypto assets and may not always provide profits or ROI, But they're becoming a valuable innovation in blockchain technology and their use in business and other economic purposes will continue to grow as time goes on.

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