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NFT: 5 Things You Didn’t Know About Non-Fungible Currencies

You may have heard about NFTs or Non-Fungible Currencies, in its most literal translation, and that is why you are here. This has been a controversial topic in recent months, that is why we will explain to you from our point of view and after documenting what it means, including what NFTs are for.

Non -Fungible Tokens or NFTs are cryptographic assets that are found within a chain of blocks with identification codes that distinguish them from each other and make each one unique.

If it is not entirely clear to you, you can continue reading that we explain more in depth

1 – What are NFTs and what are they for?

First of all, the term “non-expendable” basically means irreplaceable and unique. What sets NFTs apart from cryptocurrencies is that they cannot be exchanged or traded in equivalent terms.

Fungible tokens as we refer to cryptocurrencies, can be used as a medium for business transactions as they are identical to each other. For example, a bitcoin is fungible, and this is because if you exchange one for another, you will get the same in return.

An NTF would be like a unique trading card, since if you exchange it for a different card, you would be getting something completely different. This is an evolution of the initial concept of cryptocurrencies.

Since financial systems today are based on sophisticated trading and lending strategies for different types of assets, ranging from real estate to works of art.

If you think that this is probably going to work in the very long term, and that you are not going to see it, here is some information:

In 2021, collectors and dealers spent around $22 billion on NFTs, up from $100 million in 2020. The data comes from DappRadar, which regularly provides trade reports and leaderboards of top NFT sales.

Many people wonder what could be a useful use for NFTs. And several potential uses have already surfaced, like the ones you’re about to see:

  • Tickets to Events: Well, if these passes or tickets were created in NFTs, there would be much more control, since there would be an exchange record. Done this way, there is no possibility of it being stolen, or forged, since there is no possibility of replacing the Token in a chain of blocks associated with said pass.
  • Fashion: Having a digital record of authenticity greatly helps with issues like product counterfeiting. In this case, the luxury products could have an NFT attached that proves that they are genuine, as an inviolable certificate . Goodbye to the replicas of the Chinese market! In the same way, a non-fungible card could show important data on the origin of the product, such as the materials used, where they were obtained, what tests were carried out, with certifications and from which countries I identify the product from proximity, how far the product has traveled
  • Games: In the case of games, NFTs provide players with a way to have unique in-game items. Identify if these elements have the quality of digital property, certified and guaranteed. In turn, this enables the creation of highly dynamic digital economies.

2 – How do NFTs work?

NFTs can be anything digital, like drawings, photos, audio or songs and more, but much of the excitement these days revolves around using the technology to sell digital art.

But these have practically no limits. The different construction of each NFT has potential depending on its use, being able to digitally represent any physical asset you can imagine.

NFTs are also a very good option to eliminate intermediaries and connect artists with their audience, simplifying transactions and creating new markets.

It is much easier to divide a digital real estate asset among several owners than a physical one, right? Sandbox and Decentraland have already implemented such a concept.

Non-Fungible Tokens are also great for managing identities, for example in the case of physical passports that must be presented at every point of entry and exit.

By converting each passport into an NFT, unique identification characteristics would be obtained, making the entry and exit processes easier, while making it difficult to the point of becoming practically impossible to forge these documents.

On the other hand, there are the Smart Contracts or intelligent contracts. These are other features of Blockchain technology that is quite interesting. They can store statements that are executed when conditions are met.

3 – What determines the value of NFTs?

If anyone can view individual images or entire collections online, for free, then why are people willing to spend thousands on something they could easily capture or download?

The answer is that NFTs allow the buyer to keep the original item.  Let’s think of it as a certificate of authenticity that serves as proof of ownership. 

Collectors for their part adore and value the rights granted to them more than the item itself.

This also sets NTFs apart from most digital creations, which are almost always in infinite supply. Hypothetically, cutting off the supply should increase the value of said asset, this is assuming that there is demand.

Are people really considering that this is the new way of collecting art?

The truth is that many people do. Like the one who paid almost $390,000 for a 50-second video or the one who paid $6.6 million for a video by artist Beeple.

But there are also many who still do not believe or trust in the benefits of NFTs and consider that whoever invests in them is wasting their money.

These are the same people who use the argument of taking screenshots or saving artwork by right clicking, as a way of saying ‘this is mine’.

But what really gives value to an NFT is that they are designed to give you something that cannot be copied: Ownership of the work itself. For example: anyone could buy a print of the Mona lisa for €20, but only one person can have the original and it is precisely this that gives it the quality of the genuine and its inherent value.

4 – How to make money with NFTs?

The following two methods are the most common, but because we are at an early stage of this technology, new opportunities are still being discovered.

a)   Create and sell your own NFTs : Can anyone make an NFT?

Surprisingly, creating an NFT is not the most complicated and there are even platforms where you can find guidance on the process. Here is a short video that explains the basics.

Of course, this tutorial leaves out what really makes a collection sell well, such as the marketing and sales aspect, as well as the community that follows the artist’s work.

If you want to know more about the topic from this approach, we recommend you to follow influencers or news sites that talk about it. You can also consider following NFT related communities, mainly on Discord and Telegram.

B)   Trade NFTs on trusted platforms

You can participate in the buying and selling of NFT items on the market profitably. Like any other type of “trading” or “fliping”, you must buy “cheap” and sell “high”.

You can also get free or low-cost NFTs (via airdrops) by following industry news and participating in early-stage projects.

5 – How to buy or invest in NFT?

If you are really interested in starting your own NFT collection, you should consider certain key elements.

First of all, you will need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You will most likely need to buy some cryptocurrency like Ether, depending on the currencies your NFT provider accepts.

You will ask yourself, how to buy cryptocurrencies? Well with a credit card or direct deposit on platforms like Coinbase, Binance, Kraken, eToro and even Paypal today. After purchasing, you can move them to your wallet.

You must take into account the management fees within the Blockchain or ” gas fee ” when investigating the options. The vast majority of exchanges charge a percentage of the transaction we make when buying.

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