What is an NFT and how does it work
The NFT hype machine hit overdrive when the digital artwork of apes began selling for millions of dollars in 2021. Celebrities were involved, and corporations naturally took notice. Investors didn’t want to miss out on the next big crypto phenomenon, turning the NFT bonanza into a gold rush.
Soon, the question on everyone’s lips was, “what are NFTs and how do they work?” forcing crypto bros across the Internet to roll their eyes. So, let’s roll back the curtain and try to explain NFTs to you.
NFT definition: What are NFTS
The definition of NFT is as follows: An NFT is a unique cryptographic asset that leverages the blockchain for security. But unlike other assets that use blockchain like bitcoin, NFTs are non-fungible tokens.
Non-fungible is a fancy way of saying that NFTs are one-of-a-kind; a feature that seems to accelerate their value. Compare this to a fungible asset like Ethereum, Litecoin, Dogecoin, or Bitcoin that can be exchanged for exactly another one like it.
How does NFT work?
NFTs exist on the Ethereum blockchain to maintain their integrity. You can check out how blockchain works to learn more about the nuances of NFTs and other digital assets. But NFTs typically represent real-world digital items like art, music, a GIF, a tweet, text messages, and other
silly err useful things.
What is the point of an NFT and what are NFTs used for?
There is no point of NFTs. Just kidding! It depends on who you ask. NFT enthusiasts will tell you that having an NFT is about owning something unique and being part of a larger movement. Some NFT fans liken owning NFT art to owning the Mona Lisa.
NFT detractors would call that a false equivalency because there is only one Mona Lisa with limited supply. A skeptic would argue that if the Mona Lisa were as “unique” as NFT art, there would be thousands of them, each with only minor differentiations, with more Mona Lisas on the assembly line.
What is NFT in crypto: Is crypto and NFT the same?
It depends on how you define “crypto.” If you believe crypto stands for cryptographic assets, then yes, NFTs are a type of crypto. However, if you believe that crypto means cryptocurrency, then no, NFTs aren’t a cryptocurrency.
Unlike cryptocurrency, NFTs can’t be exchanged at an equal value, similar to bitcoins and other digital money.
What is the value of an NFT?
According to Coinbase, an NFT is worth $0.00000057. The value of NFTs fluctuates, so please check current prices.
NFTs can represent a wide variety of digital items:
- Sound effects
- Domain names
- Video game items
What is NFT art?
NFT art is a digital piece of art that only exists in the digital universe.
What is NFT stock?
NFT stocks are public companies with business interests in non-fungible tokens.
What is an NFT game?
NFT games involve NFT finance and adopt different gaming models. “Pay-to-Earn” is a popular NFT gaming model.
What is an NFT card?
NFT trading cards are a digital representation of physical trading cards that utilize blockchain technology for authenticity and immutability. Even if the physical version is lost or destroyed, the NFT will continue to exist.
What is an NFT domain?
NFT Domains are a new kind of web extension that exist on the blockchain to give users control of their stored data.
What is NFT Mining?
The processing of creating a non-fungible token on the blockchain is called NFT mining.
What is minting an NFT?
Minting an NFT means converting digital data into digital assets on the blockchain.
What is staking an NFT?
NFT staking is the processing of locking away NFTs on blockchains so that they can’t be sold, typically to raise their value.
NFT, Blockchain, and the Metaverse
As you probably know, the metaverse is an evolving concept of virtual worlds where users can engage with others and their virtual environments more sophisticatedly than current technology allows. Experts believe that blockchains and NFTs will play an important role in the future of the metaverse. While blockchain technology will help validate and secure assets like contracts, currency, and tokens, NFTs will ensure that digital assets remain unique and tradable.
NFTs are an interesting, if somewhat controversial, piece of technology. Certainly, just about everyone wants one, including clever customer support scammers who target NFT enthusiasts.
We have touched just the tip of this digital iceberg in this blog. Check out our Lock and Code podcast for everything you ever wanted to know about NFTs, including whether they're a safe and smart investment.