NFTs are revolutionizing the digital asset market. If you don’t know what they are and why they’re trending, read on to find out everything about this digital resource that is gaining more and more popularity. Let’s get started!
You might be hearing about NFTs all the time but you still don’t really know what they are or what utility they might have.
This is the time to learn!
And the best way for you to get to know the world of non-fungible tokens is by starting with the concepts, without beating around the bush or using too many technical terms.
Will you join us?
What is a non-fungible token?
Non-fungible goods are all those goods that cannot be replaced or exchanged, much less consumed; for example, a work of art.
In contrast to these, fungible goods are, for example, the furniture in your home that can be exchanged and its value will depend on characteristics such as weight, the material with which they were made or the measures, while the use wears them down and lowers their value.
Another example may be, even, a USD 10 bill that, when exchanged for another, does not lose its value.
So far so good, right? Let’s continue, then, with the term that brought you here. What are NFTs? Here’s the answer, keep reading.
What is an NFT?
NFTs are units of value that have been assigned to a very frequent use digital business model in the world of cryptocurrencies.
The term comes from the English initials Non Fungible Token or Non Fungible Token after its translation into Spanish.
These units have a close relationship with cryptocurrencies but only because of their technological universe, because digital currencies correspond to a fungible good and, as we have already told you, NFTs are non-fungible goods.
So they are simply elements that are part of the online universe that today interests many people in different parts of the world.
Cryptocurrencies can be taken as a precious metal because their value can fluctuate at any time, making the transaction change and benefit the seller of that element.
Very similar is the behavior of these coins in the current digital system.
However, goods made under some precious metal can arise and these have a particular value. It differs from digital currencies because it works and is marketed with a single value; a work of art is the most accurate proof of this.
This is why NFTs are assets that cannot be altered or exchanged for something else. There are no two NFTs that are alike and you will certainly not find two pieces of art that are also NFTs.
Therefore, we recommend that you think of NFTs as works of art on a larger scale.
Why do we say this? Because there is only one and it is located in a specific exhibition hall, in this case online platforms, with a single price.
They are in trend, so much so that users are willing to pay thousands of dollars for these types of business alternatives.
Now that you know what NFT is, we will tell you about the origin of these new economic alternatives. Don’t stop reading!
Origins of NFTs
The origin of NFTs dates back to the beginning of the digital currency and blockchain networks industry.
For the year 2012, colored coins began to appear that, for many, correspond to the first antecedent of the NFTs that are currently on online platforms.
According to experts, those colored coins correspond to the first non-fungible tokens that were traded on Bitcoin’s blockchain chains.
However, its operation is very different from everything we know today.
In the past, those digital items were just small denominations of Bitcoin; that is, the smallest unit used to represent a variety of online items and diverse assets.
It was in the year 2017 when the cryptocurrency network Ethereum designs and presents a new system to store NFT, this is when its evolution begins and they have always been linked to them, despite the fact that there are other mechanisms to store them as it happens with digital wallets.
What gives value to NFTs?
The value given to NFTs will depend on the flow within the market; that is, its supply and demand. Here everything will depend on the type of asset that is traded and how it is represented in the blockchain.
This means that if the asset is tangible like a property, its price will be reflected in the real world through its NFT in the blockchain.
Otherwise, it will happen with a digital piece that, since it does not come with a price tag, its value will be purely speculative and, as we said, it will depend on the market.
If we go back to the example of works of art, the price of each piece will be given according to the feeling that exists in the market and the potential buyers who are willing to pay for it.
In short, each seller sets the value he wants and it will be up to the buyer if he is able to pay the cost to obtain the property of that digital asset. Here not only works of art enter, but also all digital pieces such as publications, cards, illustrations and many more.
How do NFTs work?
Each NFT works through the technology known as blockchain or block chain, which is the same one used in cryptocurrencies. It is a network of computers that are decentralized, with blocks or nodes linked and, in addition, are secured with the use of cryptography.
The blocks are linked to a previous block with some data that can be modified.
In the case of NFTs, a digital certificate of authenticity is granted, these are metadata that cannot be altered since the idea is to guarantee the value of the game and the acquisitions and transactions made.
So if you happen to buy a piece that is tokenized with NFT you should know that there is an online record that indicates the first value it obtained, it is like an online registry in which its route is known.
Everything is recorded in the Ethereum network standards, where they usually operate.
What is an NFT used for?
An NFT is used so that all those artists or creators of digital content have a safe and real opportunity to monetize their works.
It is a space that helps them not to depend on places like art galleries, museums or auctions. In addition to selling, they will have the desired recognition.
Any artist can market their pieces directly to the interested consumer, making this one stay with a wide margin of profits.
With this type of alternative, royalties can be programmed to receive a percentage of sales at the time of sale to each owner. A component that makes NFTs much more attractive.
Why do people buy NFTs?
People are buying NFTs because they believe their value will increase over time, allowing them to be resold for more money in the future.
So, no one spends to spend on pieces that may seem outlandish, everything has a meaning and this, perhaps, may be the most logical of all.
So, if today you are able to buy a piece valued, for example, at USD 100 thousand it is because you are aware that later you will make money from it because it is a unique asset and, therefore, will have a greater value because there is no other work like it.
What is the best-selling NFT?
There are many NFT assets that have been traded in recent times, from the most sought-after to the most unusual. However, we will only reveal three of the best-selling ones so that you can do your own research on them, take note:
It is the work of artist Pak who broke all the barriers of that market by commercializing that piece which, through the bidding of about 300 buyers, was sold for a total of USD 9.8 million.
Everydays: The first 5000 days
It is the most expensive NFT that has been sold by artist Beeple in an auction. It is a collage composed of 5000 pieces of the artist collected since 2007. In the auction, more than 30 bidders bid until the amount of USD 69.3 million was reached.
Again, artist Pak and Julian Assange designed this work as a fight for the release of Wikileaks founder. The piece achieved a number of USD 52.7 million and is also used as crowdfunding to allocate the money raised to the activist’s defense.
Without a doubt, the NFT market grows vertiginously, that is why many artists have taken advantage of the benefits it offers. Their art is exalted and they can achieve recognition immediately.
Are you ready to create or are you part of the team that is willing to buy NFT? In either case, now is the time to do it. Success!