There has been a huge buzz around NFTs in the past couple of years. However, the birth of the Metaverse is going to take it to the next level. If you are someone new to the world of NFTs and want to learn more about it, this guide is for you.
What is an NFT?
An NFT or non-fungible token is an asset that is not interchangeable and one-of-a-kind in the world. An NFT is stored as data on a blockchain in the form of a digital ledger. You can also trade and sell your NFTs at any time.
Types of NFTs
NFTs come in many digital forms. However, five of the most common NFTs are:
- Art – a piece of art turned into a digital file
- Music - a digital piece of music that is one-of-a-kind with rights of protection against copying or use
- Game Objects – the digital objects, tools, and collectibles in the gaming world. It may also include digital NFTs of players’ images, gear, etc.
- Redeemable – a digital NFT backed by a physical object. For example, an NFT of a whiskey bottle that the owner can redeem for a bottle of whiskey.
- Identity – a cryptographic NFT that is proof of your identity in the virtual world
How Does NFT Work?
You can buy and sell NFTs on specialized platforms just like cryptocurrencies. A sale does not have to involve the transfer of any object depicted in the token. You can buy or sell an NFT of a famous painting without a buyer receiving the physical painting – it is all about ownership in a digital world.
It is the certificate of ownership that changes NFTs registration on a blockchain. However, you must keep this certificate safely in a digital wallet.
In order to buy an NFT, your wallet must contain enough relevant cryptocoins. For instance, you must have enough Ethereum (ETH) if you buy an NFT On an Ethereum-based blockchain. Remember that NFTs are only digital contracts with specific rules embedded within them.
Steps to Buy NFTs
Follow the 4-steps to purchase NFT tokens.
- Go to the NFT selling platforms such as Opensea.io and click on connect button found on the top right corner. For here, you must select the wallet you wish to connect to and log in.
- Search for NFT you’d like to own
- A confirmation window will appear asking you double check your order details.
- Click on your wallet, and it will open a pop-up asking to confirm the transaction. If you wish to continue, confirm the transaction.
Benefits of Investing in NFTs
Some of the advantages to investing in NFTs include:
- It fosters marketplace efficiency and reduces time and cost wastage due to intermediaries.
- You can use NFTs to fractionalize the ownership of a physical asset, including real estate, artwork, and fine jewelry. The market for certain NFTs can be really high, resulting in higher prices due to greater liquidity.
- The blockchain technology backing NFTs is highly secure
7 Platforms for NFTs
If you are wondering where you can start trading or look for NFTs, here are 7 of the world’s most popular NFT marketplaces.
- Axie Infinity Market
- NBA Top Shot
- Nifty Gateway
NFT may be in its infancy stage, but giants like Meta are already focusing on NFTs as its currency of choice in the Metaverse. You may be on the fence of to take a dip into this pool, but it is definitely worth keeping an eye on the trends and making the right move at the right time.