What is NFT? All You Need To Know About NFT

nft explained

Nothing is more baffling than witnessing digital NFT artworks sold for millions of dollars. So you sit there, scrolling through news sites and wondering how crazy the world has become when people are scrambling to pay 3.5 million dollars for a GIF of a cat! So, what’s so fancy about NFTs that they’ve become so trendy?

Alright, let us start with the basics.

What does the term NFT mean?

NFT stands for Non-Fungible Token; such tokens may represent digital or physical assets in the real world. When you buy an NFT, you actually have a smart contract written in the blockchain for you (like an immutable digital ledger).

The concept was first conceived in 2015 as a use case for the digital cryptocurrency Ethereum.You’re still clueless, aren’t you? Alright, my apologies, it's really complicated and vague at first. Let us simplify things a little and start with the “non-fungible” bit; it simply means something is unique and can not be replaced with something else. For instance, you can not replace your contract for the digital replica of the “Mona Lisa” with a contract for another painting; only you can sell your “Mona Lisa.” In other words, you have become the legitimate owner of the painting or artwork and have the right to sell it whenever you choose for how much you want.

what does NFT mean

Whereas in a museum, everyone can see the painting, on the internet, they can download and print it. Though it may be outlawed in the future, for now, everyone can download it, use it as an avatar, or edit it.

Can NFTs be something other than digital artworks?

Yes, you can sell anything using NFTs as long as it’s “digital,” such as artworks, music, your digital history, a tweet, for instance, not to mention video games, and movies. Yes, movies produced with Oscar-winning actors can become NFTs; Zero Contact is the first of its kind to premiere as an NFT. Nevertheless, the most commonly exchanged NFTs right now are digital artworks. However, it is interesting to know that although it sounds crazy and unbelievable, Twitter’s founder sold his first tweet for 3 million dollars. Non-fungible tokens are supposed to be a fundamental component of the anticipated Metaverse.

Does that mean NFTs are unique?

The answer is actually a bit funny. We have explained what NFTs mean and that you own a contract to a unique immutable product, right? Apart from the Mona Lisa of our previous example of which there is one original painting on the planet.

NFTs can be copied and sold repeatedly for the same painting or digital art, like Adidas Originals – Into the Metaverse (Phase).

So, there are people who pay thousands of dollars for an artwork or a GIF?

It is perplexing; everyone is baffled and almost disgusted by those who are buying these artworks, which is mainly the reason for the confusion and disagreement surrounding the topic of NFTs. What I see at the moment is a new trendy entertainment for the wealthy who have too much money on their hands. For example, some people paid 20,000 dollars for a video posted by the famous YouTuber Logan Paul, when they could, if they choose, watch it for free on YouTube, download it, and distribute it for free.

Can you benefit from NFTs to make money?

It depends on whether you are a seller (artist) or a buyer.

For a seller

If you have a talent for designing and creating, why not prepare for the NFT market? Indeed, the primary feature among all NFTs seems to be “hideousness.” I do not know why, but the highest-selling NFTs are ugly and, well, creepy. Nonetheless, NFTs offer the artists a unique advantage, and that is profiting from every transaction that occurs on the product by future owners since the artist is the original owner. This is especially great if the artwork becomes trendy, which was impossible before.

For a buyer

The buyer claims ownership for the product’s copyrights, i.e., they can sell their NFTs or re-distribute them elsewhere to make money. In fact, the copyright to the artwork is the real asset and not the painting itself, which may be useless.

How to trade and exchange NFTs?

NFTs are available for purchase and exchange through many NFT markets, such as Rarible, OpenSea, and SuperRare.

Here is how to buy, OpenSea as example:

open sea marketplace NFT

Step One: go to OpenSea platform and click Explore to browse through hundreds of NFT artworks. When you see an NFT you like, locate the Buy Now button, check the price, let’s say 200 Ethers (roughly 419k dollars at the time of writing).

Step Two: My Wallet window will pop up to link your crypto wallet in order to enable you to pay or create a wallet if you don’t have any by clicking on Coinbase wallet. You will be prompted to install the wallet extension to your browser or download the mobile app.

Step Three: Enter your information and create an account on Coinbase using either the extension or the app. Head back to OpenSea and click Connect to link the wallet and carry on with your purchase.

If you don’t have enough Ethers, you can buy more on Coinbase Exchange platform. A piece of advice: never buy NFTs that are high in demand. There are Gas fees, extra fees for Ethereum transactions that are exceptionally high when the demand rises.

The latest trends and future predictions for NFTs

Overall, NFTs were sold for 11 billion dollars in the first quarter of 2021. In last August 2021, NFT trading volume grew 38,000% in exchange. OpenSea recorded 75-million-dollar sales in as short as one day in that month, which is more than all of 2020.

NFT in Twitter

Twitter announced a new feature that allowed users to change their profile pictures into an NFT owned by the user. The feature was available for Twitter Blue subscribers only; you can get various advantages for a monthly subscription. The profile picture will appear in a hexagonal frame to distinguish the account of the original owner from those who simply downloaded and used the image. This may draw more attention to NFTs and indeed place more demands on them.

Are NFTs used in money laundering?

Hundreds of millions were spent buying artworks or animated GIFs that are, in my humble opinion, absolutely useless. It is hard not to see the downside of such behavior. This is a golden opportunity for money laundering.

how to buy NFT

NFTs are bought using Ethereum cryptocurrency, which in turn adds a significantly sophisticated layer of security that prevents tracking the origin of the money. This is very easy to carry on:

  • Criminals need to create an NFT artwork and advertise it on an NFT market such as OpenSea.
  • The artwork is then purchased by the criminal organization using an identity with no link to the tainted money, which will become legitimate.
  • At the time being, there is no authentication involved or any affirmation request regarding the money source in NFT transactions.

There are other steps, but we attempted to provide a concise and straightforward explanation. Usually, several crypto wallets are used for buying. In fact, crypto exchange platforms are used for an added layer of security until the money is withdrawn, having arrived safely to its destination.

Are you tired of Typing NFT?

Pretty much so.