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You have probably heard of NFT. A word that has gained instant fame owing to the Russo-Ukrainian war in Ukraine.
NFT ruled the trends on Twitter following massive digital currencies donations to Ukraine by various anti-Russian groups.
One record-breaking donation of $1.86 million was made by one NFT collection, according to blockchain analytics firm Elliptic.
But What is NFT? Here is an in-depth analysis of the meanings and uses of NFT.
What is the meaning of NFT?
NFT stands for non-fungible token. When it is in more than one unit, it is NFTs – non-fungible tokens.
These are cryptographic assets stored on a blockchain. A blockchain is a distributed database shared among the nodes of a computer network that store information electronically.
In a simple language, blockchain is a computerized way of storing data in a more secure and fidelity way as it maintains a decentralized record of transactions. This knowledge is applied when encrypting valuable digital resources such as Bitcoin and NFTs without the need for a trusted third party.
Are NFTs similar to other cryptos such as Bitcoin?
No! NFTs have unique identification codes and coded metadata, meaning that it is close to impossible to exchange one NFT with the other.
Unlike other cryptocurrencies such as Bitcoin, NFT is non-fungible – they cannot be traded or exchanged at equivalency.
This is the opposite of fungible cryptocurrencies such as Bitcoin, which are similar and can be used to exchange with other fiat currencies such as a dollar or a pound. It has a stipulated value.
What are NFTs used for?
NFTs are embracing blockchain technology that helps artists and other creatives to secure their original work.
NFTs provides a platform for creators to apply unique signatures and data to their digital file. These are unchangeable, and it only indicates the owner of the work whose signature is encoded.
NFTs have also played a part in other economic avenues. They are used to fractionalize physical assets like real estate, making it easier to divide a digital real estate asset among multiple owners than a physical one.
How do NFTs investors make money?
People investing in NFTs make money by buying, selling, and re-selling original digital files and artwork, which are usually bought expensively since NFTs prove authenticity.
How can I buy NFTs?
They are only purchased using Ether, a transactional token that facilitates operations on the Ethereum Network.
Meaning, you must have at least some basic knowledge of cryptocurrency because Ether is another form of virtual currency in form of a blockchain cryptocurrency.
Where can I buy NFTs?
NFTs are purchased in NFT marketplaces, which is an internet-based shop where one can acquire and mine NFT.
They are ranked based on the ease of mining and the prices of NFTs.
Top 10 NFT marketplaces
1. OpenSea
2. Rarible
3. Mintable
4. Foundation
5. Nifty Gateway
6. SuperRare
7. Known Origin
8. NBA Top Shot
9. Draftkings Marketplace
10. Axie Infinity Market
The post What Is NFT and How Does It Work? Non-fungible Tokens Explained appeared first on LitKenya.
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