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WHAT ARE NFT’S? NFT’S EXPLAINED

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WHAT ARE NFTS
What are NFT's really and how do they work?

NFT’s stands for Non-Fungible-Tokens are digital assets that represent a wide range of unique tangible and intangible items from art, sports card, collectibles, virtual real-estate and much much more”. – Coindesk.com

Simply putting up the word “Fungible” means something that can be interchanged with other goods or assets of the same type. This means that a good or a asset can be replicated and used over and over again. For example, a $5 dollar bill. There are millions or billions of $5 bills in the US however, no one holds the right to be the creator of the bill or own the True Value of the bill.

Just the opposite of that is the word “Non-Fungible” meaning something that cannot be interchanged, replaced or replicated.

This is where the hype of NFT’s really began with the idea that an asset can have the unique ability to be irreplaceable.

A Bitcoin is fungible where one can trade one Bitcoin for another and both the owners will have the exact same thing. While a trading card is non-fungible, you can only have one of a kind unique rare baseball card. The problem still arises with the verification of authenticity and uniqueness of the Baseball card and previously, items were graded, valued by companies like PSA. To some extent, trading cards did hold some level of grading But digitally, it was almost close to impossible to verify authenticity and know who actually owns the right to the digital asset.

Here comes, NFT’s and using NFT’s where one can make their artwork , goods, assets, music irreplaceable and unique.

HOW DO NFT ASSETS BECOME NON-FUNGIBLE OR UNIQUE?

NFT assets cannot be directly exchanged with one another. As no two NFT assets are identical to each other, while even a small change of colour will make both NFT’s different from each other.

This is because each NFT’s hold a specific code, information or data that is unique solely to the owner.

The characteristics that make NFT’s unique are:

  • Indivisible: NFT’s cannot be divided into smaller denominations like Bitcoin.
  • Verifiable: NFT token assets are Verifiable meaning any NFT assets can be traced back to the original owner or creator. As the NFT holds a unique historical data of ownership on the blockchain.
  • Indestructible: Since all the data stored on the blockchain, using smart contracts, the NFT tokens cannot be destroyed nor can they be removed or duplicated. Another thing is that the ownership of the token is solely given to the one who creates the buys the NFT, while the companies that own the blockchain have no ownership over the NFT assets.

HOW DO NFT’S WORK?

NFT’s are a part of the Ethereum blockchain which is the second largest blockchain after bitcoin. However, the unique thing about Ethereum is that it can store additional information or data and that is how NFT came into existence.

However, other blockchains like Dogecoin and others can also make their own versions of NFT which is equally possible. But Ethereum is still one of the biggest blockchains that uses NFT’s.

Using the extra information that the Ethereum Blockchain provides, NFT assets are able to become unique and irreplaceable.

WHAT ARE THE MOST EXPENSIVE NFT’S?

Here are the Top 5 Most Valuable and Expensive NFT’s ever been traded on the marketplaces.

1. DRAGON THE CRYPTOKITTY

600 ETH ( Estimated US dollar Value – $10,33,098 USD)

Check price – https://opensea.io/assets/0x06012c8cf97bead5deae237070f9587f8e7a266d/896775

2. Alien #2089

605 ETH (Estimated US dollar Value – $10,44,907.60 USD)

3. Angel Axie from Axie Infinity

300 ETH (Estimated US dollar Value – $5,16,651.00 USD)

4. One of a Kind 1-1-1 Race Car F1 Delta Time

415 ETH (Estimated US dollar value – $7,14,700.55 USD)

5. NBA Topshot LeBron James

Value Approx. $208,000 USD

CAN NFT’S BE CONNECTED TO THE REAL WORLD GOODS AND ASSETS?

Technically, No, because only digital assets are a part of NFT’s but practically Yes, as there are companies that have made attempts like Nike, who is working towards a patent of a NFT system that can verify the authenticity of sneakers using an NFT system calling it “Crypto Kicks”.

Therefore, some goods and assets are definitely seeing a future of NFT’s being installed upon them.

WHAT ARE THE MARKETPLACES WHERE NFT’S ARE BEING TRADED & SOLD?

There are several marketplaces where NFT’s are frequently being traded and sold. They include:

  • Rarible
  • OpenSea
  • Nifty Gateway
  • Foundation App

However, there are many more marketplaces where NFT’s are being traded and sold, while the above listed ones are the most famous and reputed ones.

CAN I BUY AN NFT USING JUST US dollar?

Practically, No as digital assets and NFT’S can only be bought and sold using Crypto Currencies. Right now, the most commonly used Crypto Currency for trading NFT’S is Ethereum, Therefore, you will need to buy Ethereum first in order for you to buy any NFT’s.

Most of the marketplaces also use Ethereum as the sole base Crypto Currency for trading, selling and buying assets.

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