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What is an NFT?

Published on
June 22, 2022

What is an NFT?

As the technology behind blockchains progresses, cryptocurrency is now viewed differently than the former misconception woven around it.

Businesses now engage it as a payment method. Governments have started obtaining their crypto as well. Individuals are not left out in this trendy crypto market. With this heightened interest in blockchain technology, innovators have begun brainstorming ways to improve things.

There are virtual assets that have the exact representation as real-world items. For example, assets like artwork, real estate, video games, GIFs can be represented digitally. These assets are now purchased digitally, mostly with crypto, and are encrypted with the same underlying software as many cryptos.

The NFT stands for non-fungible token and is encrypted using cryptography built on blockchain technology (like on ethereum for MonsterArmy). Each asset in NFT has a unique identification code that makes them different.

What Makes it non-fungible?

Just like the physical money we spend, crypto is also fungible. This means one can exchange them for something of equal value. For example, one Ether has equal value to another unit of Ether. Similarly, one value of Bitcoin is of equal value to another unit.

But this is not so for the NFT in that it has a digital signature that makes it different and unique. This feature does not allow for NFTs to be traded for one another (hence, it can't serve as a means of commercial transactions).

How can you buy NFTs?

Here are some of the necessary items you'll need to acquire:

Usually, owning a cryptocurrency - primarily Ethereum, and storing it in a digital wallet is the first step. Most NFTs can be purchased using cryptocurrencies, like Ether and Solana, so having some of it is crucial.

NFTs can also be bought using your credit card on platforms - like PayPal, Coinbase, and even Kraken, after which you can then move it to the wallet of your choice.

Never forget that most exchanges will at least charge a percentage of your transaction when you purchase crypto. So, you might want to include this when doing your research.

The NFT Market

Once your wallet has been set up and funded, you'll be able to shop from any NFT site you choose. There are various sites you can shop from, but some of the best include:

1. Rarible

This open marketplace allows digital artists and creators to issue and sell NFT. The tokens issued on the platform enable holders to weigh features like fees.

2. OpenSea

This site is a peer-to-peer platform. You need to open an account to browse various NFT collections to get started on this site.

Although these sites host various NFT artists, be sure you do proper research before purchasing.

It would be best to consider the ancient adage "caveat emptor," which means buyer beware in mind.

Should you invest in NFT?

Just because you can buy the NFT, does that mean you should? It's a personal decision.

"The future of the NFT is uncertain, which makes it a risky investment. So, it may be worth investing little amount for now".

In other words, if you have money to spare and if an art piece holds so much meaning for you, the NFT is an option to consider. But other investors believe that the NFT is an excellent place to make so many investments as it tends to generate so much profit in the future.

Most importantly, before you invest, please do your research, learn the field involved, and decide to go ahead with it with so much care.