Hey there, I see you want to know more about NFTs. Well, you should check out this article.

The rise of NFTs in the tech space has been huge. We have recently seen/heard of celebrities spending millions of dollars on digital assets(artwork, games), which people call NFTs. This has brought up lots of questions starting from what The heck are NFTs, why do people buy NFTs, and what can be referred to as an NFT. I will answer these questions here in this article. Let’s begin ;)

What are NFTs?

The term NFT stands for Non-Fungible Token. NFTs are digital tokens powered by smart contracts that can be used to show ownership of a unique item. NFTs are unique because they can have only one official owner at a time. This means they can only be sold or passed on to another person but cannot be copied. The reason is that NFTs are usually stored on the blockchain and that makes it difficult for the record of ownership to be modified.

Non-Fungibility

NFTs are called non-fungible because they are unique and cannot be interchanged for items similar to them. Unlike fungible tokens that can be exchanged at the same rate i.e a coin for a coin. For example, a fungible token like 1ETH can be exchanged for the same 1ETH because they are the same and have the same value. But for non-fungible tokens, it doesn’t work the same way. Your non-fungible token has to be exchanged for something of a higher rate and not the same value.

NFT Use Cases

NFTs can be in different forms and not just artworks. They can be digital and non-digital

Digital

• GIFs
• Collectibles
• Music
• Artworks
• Videos

Non-digital

• Signatures
• Legal documents
• Tokenized invoices
• Deeds to a car
• Tickets to an event

The Benefits of NFTs

• NFTs provide a good record of authenticity and ownership as held which is verifiable on the blockchain
• NFTs create a new space for artists that enables them to sell digital assets and still benefit whenever - their art is being resold.
• NFTs in recent times after being sold to celebrities can be of really good economic benefit to the creator
• In some cases, NFTs give us real-world benefits to the owners just like groups, meetups, and events

Some NFT Terminologies

Staking

Staking refers to an NFT owner locking up their asset for rewards. The reward for staking is usually cryptocurrency.

Minting

Minting an NFT is putting a token uniquely onto the blockchain to make it purchasable.

Gas Fees

Gas fees, usually the blockchain’s native cryptocurrency are known as the payments that individuals make to complete a transaction on the blockchain.

Floor Price

The floor price is the lowest amount at which you can purchase an NFT.

PFP

This just means profile picture. This refers to the use of NFTs as profile pictures on social media like Twitter

AirDrop

Airdrops are generally used to add additional value or to draw attention to a brand or experience. They can be used as a distribution of NFTs or digital assets that are sent to a web3 wallet address for free as a promotion.

Understanding How NFTs Work

Just like I said at the beginning, NFTs can have just one owner at a time. That is to say that it can be owned by one person though the same pattern can be used for another NFT but it's not the same. For example, the Monalisa is the most popular artwork by Da Vinci and has only one original copy which is in Pais, France but so far we have seen a lot of other artworks that look like and are called the Mona Lisa but aren't the real Mona Lisa. From the example above, the Mona Lisa look-alikes are entirely different from the original version in France, This is because it is unique and was painted by Da Vinci himself. Though the lookalikes are also unique in their own way but not in the same way, probably by color type or something else. The same logic applies to NFTs, the ownership is always managed by a uniqueID and metadata that no other token can remake.

Conclusion

Now you have come to the end of this article, and I am sure you know what an NFT is and how it works. You should also know that NFTs are a considerable investment, and if you want to check out a few NFTs, here are some trendy ones: CryptoKitties, BoredApe, Hazemonkey and Azuki. Thank you for reading :)