What is an NFT?
Non-fungible tokens, or NFTs, are irreplaceable digital assets that certify ownership and authenticity. An authority cannot substitute, alter, copy, or subdivide an NFT because a blockchain records them. NFT owners trade them by transferring ownership.
An NFT can be a digital file like an image, audio, or video. The artistic aspect of these assets spread to their use. NFT trades ensure ownership of these digital properties. Many people trade them on NFT platforms in exchange for cryptocurrency.
NFTs differ in representation since they’re all unique and consequently differ in value, similar to how a Van Gogh is valued differently from a doodle put on a fridge.
Following are the steps involved in trading NFTs on the market.
- Choosing an NFT
- Looking for an exchange that lists that NFT
- Signing up with the exchange and verifying the account with a government-issued ID card
- Buying some tokens and setting capital to buy and trade NFTs
- Trading those tokens for other cryptocurrencies, fiat currency, or both
Key features of an NFT
These are the three key features of NFT.
- NFTs are digital assets for personal or commercial use.
- They reside in blockchains, which makes them unique or unchangeable, implying no one can replace or modify them.
- NFTs are generally exchanged for cryptocurrency.
Uses of NFTs
The creators of NFTs decide how they want them to be used. Listed below are different uses of NFT.
- Digital art is the most recurrent NFT use observed from its onset. NFTs linked to art have garnered enough attention to spread the word about other techs, like blockchain or cryptocurrency.
- Gamers use NFTs in online games. A gamer controls such components instead of the game developer. They’re known to trade in-game NFTs with other players and collect a selection of other tokens.
- Music and sound files can also be encrypted into NFTs. A song, a whole album, or short sound clips recorded or created digitally can be linked with NFTs. Many renowned musical artists have created unique tokens in collaboration with visual artists.
- Film production companies and filmmakers have also jumped on the bandwagon by creating digital tokens. For example, promotional digital posters released for Deadpool 2 were later made available on OpenSea and GFT for exchange. Director Quentin Tarantino cast seven NFTs based on uncut scenes from his movie Pulp Fiction earlier in 2021.
- Other digital media has also been linked to NFTs, including files like memes, virtual worlds or metaverses, sports highlights, or event tickets. There have been other unusual places where people have come up with NFTs. One such case involves the potential auction of NFTs for the patent disclosure of Nobel prize-winning inventions.
How to create an NFT
Since NFTs have become a trend, brands, businesses, and digital artists have created these distinct tokens. Platforms involved in NFT trading or NFT marketplaces have made creating or mining NFTs easier. Many NFT creators have earned millions of dollars since its inception.
Here’s the step-by-step procedure for mining an NFT.
- Choosing a blockchain. First and foremost, the user selects a blockchain to mint an NFT. Most NFT artists prefer Ethereum. Some other popular options include Polkadot, Binance Smart Chain, Tezos, or Cosmos.
- Setting up a digital wallet. People are required to create a digital wallet or a crypto wallet. This wallet is used to pay the gas fee of minting an NFT. Some popular wallets include MetaMask (compatible with Ethereum Blockchain), Trust Wallet, Alpha Wallet, and Coinbase Wallet.
- Choosing an NFT marketplace. The next step involves selecting a platform or an NFT marketplace. Creators should research their options thoroughly and choose a marketplace that best fits their NFT. Some marketplaces require the use of their own cryptocurrency for the gas fee. Other NFT marketplace options include OpenSea, Mintable, SuperRare, ThetaDrop, and Nifty Gateway.
- Selecting a digital asset. Once a marketplace has been selected, it is time to pick the creative aspect of the NFT. Everything from an image, song, meme or GIF to a tweet can be turned into an NFT. People must ascertain that the media that they have picked is unique. They own intellectual property rights. Using someone else’s property could result in lawsuits.
Learn more about different cryptocurrency exchanges and start trading fiat currency, NFT, and other tokenized currency.
Sagar Joshi
Sagar Joshi is a former content marketing specialist at G2 in India. He is an engineer with a keen interest in data analytics and cybersecurity. He writes about topics related to them. You can find him reading books, learning a new language, or playing pool in his free time.
