The onset of cryptocurrency and the digitization of money has brought a massive revolution worldwide. The decentralization of things made the buyer and seller communicate with each other directly without the involvement of any third-party applications, in order to avoid the payment of commission on the way. The blockchain method does this work.
NFTs or Non-fungible tokens are basically an interpretation of this blockchain, much like bitcoins or Ethereum. The blockchain registers tokens for certain artworks, pieces of music, or any other digital assets which are a matter of possession for the original owner. It prevents any other person to steal the credibility of the original artist or maker. The blockchain stores these data and send a copy to every computer associated with the network.
What does NFT mean and how does it work?
The non-fungible tokens are cryptocurrencies that have a unique value, unlike any other cryptocurrencies with standard values. They are the tokens associated with a digital file like a jpg., gif, etc., with a unique identity and specific ownership of the creator. These data get stored in the blockchain and get tangled with one another in millions of computers, across the world and hence is almost impossible to change or forge.
They are one-of-a-kind digital assets that can and involves digital trading but are non-tangible. Since they hold a unique value, it is not possible to exchange a token for any other similar token, and hence they are inexorable. The owner cannot even break a token for a single asset into smaller pieces.
The owner of these tokens places a bid for the ownership of them. Many private companies or any individuals buy these tokens and own the digitally made artwork. Further, when its value goes up, the buyer plans to sell the token to another buyer and gets a 10% commission, hence gaining profit. The original producer gets 10% royalty each time it is being sold, and this continues.
What are the benefits of using NFT?
NFTs ensure the authenticity and originality of the work. As a seller, it will ensure that he/she gets full credit for their work. This rarely happens when working under labels or companies. It provides a social status for the creator and makes people recognize the creator for their talent and work. It provides the maximum amount to the seller, for which he/she can sell the piece of his/her work, ensuring some credits for every transaction made in the future. The “tokenization” of the artworks also provides a digital certificate to the owner.
Many people or private companies are nowadays interested in buying these tokens. They are making profits by using this system. The purchasing of an exclusive piece of painting, music, or any other item makes the buyer exclusive of its ownership and increases their status in society. The buyers also buy these tokens as an investment for the future. They target the marketing sales of these tokens and plan to sell them during their peak to make a maximum profit from them, as they will get some extra commission after selling them. There is much such information of tokens in the blockchain where the investor invested a few $1000 to resell $20000, just by trade.
How to use the system to get benefitted?
Marketplaces like ‘OpenSea’, ‘Ethereum’ or ‘Crypto.com’, works like a hub of trade the non-fungible tokens. Using cryptocurrencies like World Asset eXchange (WAX) or Ethereum’s Ether is necessary to exchange the items.
The seller will have to get help from these platforms to convert their work from files like JPG, GIF, etc. to NFTs, with the help of a simple programming language, Solidity. Then they can apply to sell their items.
The buyer can simply create a profile on these platforms and look for bids that were being posted on them. Then they need to place the bid that interests them within a deadline and the seller will decide if it’s worth the item.
The first NFT that was sold on the Ethereum blockchain in 2017 was Cryptopunks. Since then, the trading of these tokens has made a lot of progress.
Many people are getting benefitted these days using the trade of these tokens. Artists are selling their artworks, musicians are keeping their royalties, and Twitter users, like the co-founder of Twitter, Jack Dorsey, and Elon Musk are selling their tweets for millions. Still, some people believe this to be a bubble and guarantee that there is no future for this technique.
Even though the concept of these tokens is controversial these days, this trading in decentralized platforms is in trend nowadays. Many have predicted the future of this, which is still yet to be proved