What is an NFT? Meaning Explained
NFT stands for Non-Fungible Token which is a digital asset lying on a blockchain with a unique identifier and meta data and cannot be replicated. NFTs can be any digital assets like pictures, videos, art, music, blogs etc.
The blockchain records the ownership of a non-fungible token and enables the owner to transfer the ownership by selling or exchange. Real world assets also can be tokenized like real estate, documents, certificates as NFTs for efficient transfer of rights or just claim ownership in a trustless way.
A non-fungible token (NFT) is a digital identity that cannot be duplicated or substituted, logged on a blockchain, and is used to verify the legitimacy and ownership of an asset.
Types of NFTs?
The majority of NFT stories began in Arts. It is currently one of the most popular versions of NFTs on the market. Digital artwork NFTs can range from paintings to images to doodles to music to video files or blogs.
Collectibles are also the initial forms of non-fungible tokens to be introduced. In digital form, they are identical to actual items like Pokemon cards, art pieces or vintage artefacts which are unique and priceless
Metaverse encompasses digital assets, real estate identifiers, etc. NFTs facilitate the real estate transactions that propel the metaverse. These tokens give more secure, irrefutable evidence of ownership.
Membership passes - Although NFT-based memberships have largely grown and evolved alongside PFPs to provide holders with incentives. These exclusive programs utilize NFTs as access keys to open a variety of services and benefits, such as virtual and real-world experiences.
Avatars and PFPs (profile pictures) - Non-fungible tokens used as online profile photos or identifiers are classified as avatars or profile picture collections, such as CryptoPunks, Bored Apes, and Lazy Lions.
Virtual fashion: If you're going to have an online virtual identity, you'll need a wardrobe to match. This contains sneakers, hoodies, sunglasses, new skins, and other avatar items.
NFT Marketplaces
There are many different NFT marketplaces that have emerged in recent years. Some of the most popular include:
OpenSea: One of the largest and most popular NFT marketplaces, OpenSea allows users to buy, sell, and trade a wide variety of NFTs, including digital art, collectibles, and virtual real estate.
Rarible: This marketplace allows creators to mint and sell their own NFTs, and also provides a built-in wallet for storing and managing NFTs.
SuperRare: This marketplace focuses on curated digital art and has a reputation for high-quality artwork.
KnownOrigin: It is an NFT marketplace for digital art, it allows digital artists to create, sell and trade their unique digital artworks.
Nifty Gateway: This marketplace specializes in selling NFTs from popular musicians, artists, and other celebrities.
NBA Top Shot : It's a blockchain-based marketplace that sells officially licensed NBA collectibles.
Meebits : It's a marketplace for buying, selling and trading 3D virtual creatures.
These are just a few examples of the many NFT marketplaces that exist. It's worth exploring different marketplaces to find one that aligns with your interests and needs.
How to mint an NFT?
Here is a step-by-step instruction to NFT 'Minting', the process of converting your first NFT. As an example, a basic JPEG file is converted here to NFT on Opensea, one of the popular marketplaces.
Set up a Crypto wallet like Metamask to be able to connect to any dApps like Opensea.
Set up an Opensea profile and create you first NFT as a new item with all required details.
Select the blockchain for your NFT from the dropdown, pay the gas fees (if required) and click CREATE.
Your NFT will be seen in the collections like this : Futuristic Motorcycle Rider
That’s it your Non Fungible Token (NFT) is ready to HODL, Trade, Exchange
For more details on how to create NFTs, refer - What Is Minting An NFT? and How to mint NFT by Ethereum.Org. After the initial hype and raise of NFTs last year in 2021, and the current plunge and critics, the future will be determined by the level of real world utility, security and interoperability they bring to both business and personal use cases.
How do NFTs get their value?
NFTs get their value in a few different ways.
Scarcity
Like other forms of collectibles, NFTs can have value based on their rarity. NFTs that are one-of-a-kind or have a limited supply can be more valuable than those that are more common.
Authenticity and Provenance
NFTs can also have value based on the authenticity and provenance of the underlying digital asset. For example, a digital artwork created by a well-known artist may be more valuable than one created by an unknown artist.
Utility
Utility is another aspect that gives value to NFTs. For example, NFTs that grant access to exclusive experiences or virtual goods within a specific game or virtual world can be valuable for the utility they provide.
Social value
NFTs can also have value based on their perceived social value. For example, if a particular NFT is associated with a social cause or movement, it may be considered more valuable than an NFT that is not.
Speculation
Speculation is another aspect that drive the value of NFTs. Some investors buy NFTs with the expectation that the value will increase in the future, leading to a higher price.
It's worth noting that the value of NFTs can be highly subjective and can change over time based on a variety of factors. While some NFTs may have intrinsic value based on their scarcity or provenance, others may have value only because people are willing to pay for them.
Conclusion
In conclusion, NFTs, or non-fungible tokens, are a type of digital asset that are unique and cannot be replicated or replaced. They are stored on a blockchain, which allows for easy transfer of ownership and verification of authenticity. NFTs have the potential to revolutionize the way we think about digital ownership and can be used for a variety of purposes, such as representing digital art, virtual real estate, and in-game items.
While the NFT market is still in its early stages, it has already shown a lot of potential and is worth keeping an eye on in the future. As the market matures and more people become familiar with NFTs, we can expect to see more innovative uses and applications for this technology.
References
Business Insider. (n.d.). Crypto 101 – Understanding the different types of NFTs. [online] Available at: https://www.businessinsider.in/investment/news/top-9-types-of-nfts-heres-the-complete-list/slidelist/91643024.cms#slideid=91643689 [Accessed 27 Oct. 2022].
Business Today. (n.d.). Top 13 types of NFTs: Here’s the complete list. [online] Available at: https://www.businesstoday.in/crypto/story/top-13-types-of-nfts-heres-the-complete-list-328335-2022-04-02.
Clark, M. (2021). NFTs, Explained. [online] The Verge. Available at: https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq.
Conti, R. (2022). What Is An NFT? How Do NFTs Work? [online] Forbes Advisor INDIA. Available at: https://www.forbes.com/advisor/in/investing/cryptocurrency/what-is-an-nft-how-do-nfts-work/.
nft now. (2022). The 7 Types of NFTs You Need To Know About. [online] Available at: https://nftnow.com/guides/the-7-types-of-nfts-you-need-to-know-about/.
Sharma, R. (2021). Non-Fungible Token Definition: Understanding NFTs. [online] Investopedia. Available at: https://www.investopedia.com/non-fungible-tokens-nft-5115211.
