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What are NFTs?

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Meet Kumar Jain
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What are NFTs?

Hello readersđź‘‹

Would you believe me if I say that this jpeg was sold for $530 million? (Cryptopunk #9998)

image.png

That is how crazy NFTs are going.

In this blog, we would look at what NFTs really are, why are they so hyped and answer many such questions?

Without wasting a second, let's dive in.

What are NFTs?

NFTs stands for non-fungible tokens. This term might seem complex for beginners to understand. Chill! I am here to break down this for you!

First, let us understand what does the term 'fungible' means.

Fungible

You can exchange one $1 note for another $1 note. Right!
This is what fungible means.

Fungibility refers to something replaceable or exchangeable.

Example -
Money is fungible because it doesn't matter what physical dollar bill you have. Every dollar bill is worth $1, every five-dollar bill is worth $5, and so on.

i.e
Everything holds the same value.

Non-fungible

If I say now that you have a $1 note with the signature of your favorite celebrity on it. Would you still exchange it for another $1 note? Absolutely not!
Now that note has a unique value and it can't be exchanged. This is what non-fungible means.

Non-fungible refers to something unique and irreplaceable. It is a unique digital identifier that cannot be copied, substituted, or subdivided.
Example - You would not exchange your house in exchange for your friend's house.

i.e
Everything holds a unique and different value.

image.png

Fungible vs non-fungible

The following image clearly explains the difference -

  • You would easily exchange a 1$ note with another 1$ note - Fungible
  • You would easily exchange 1 bitcoin with another bitcoin - Fungible
  • If you had a painting of Monalisa by the famous painter 'Leonardo da Vinci', you would not be willing to exchange it with the Monalisa painting made by me - Non-fungible
  • If you had a digital art of something, you would also not be willing to exchange it for another digital art - Non-fungible

image.png

NFTs

An NFT is a digital asset that represents real-world objects like art, music, in-game items, and videos.

An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, including:
• Art
• GIFs
• Videos and sports highlights
• Collectibles
• Virtual avatars and video game skins
• Designer sneakers
• Music

Even tweets count. Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT for more than $2.9 million

Let's say you made a wonderful piece of digital art.

image.png

Someone says that he right-clicked on that Cryptopunk #9998 image and downloaded the same file the person paid millions of dollars for. Wow, rude!

So how would you prove your ownership as digital files can be easily copied and distributed?

Well, NFTs solve this problem

The NFT contains unique information about the owner and transactions in the blockchain.
The unique identity and ownership of an NFT is verifiable via the blockchain ledger.

Whether the original file is a JPG, MP3, GIF, or anything else, the NFT that identifies its ownership can be bought and sold just like any other type of art – and, like with physical art, the price is largely set by market demand.

What are NFTs used for?

  • Artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT.
  • Brands like Charmin and Taco Bell have auctioned off themed NFT art to raise funds for charity.

Why do people buy NFTs?

  • Investments
  • Collectables
  • FOMO

Buying an NFT also usually gets you some basic usage rights, like being able to post the image online or set it as your profile picture

image.png

How to buy NFTs

First, you’ll need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, like Ether, depending on what currencies your NFT provider accepts.

There are some popular NFT marketplaces from where you can buy and sell NFTs like -

Conclusion

  • This is the end of the blog. I think you might have understood what NFTs are, why are they so hyped and many doubts you had related to NFTs.

  • I hope you find it helpful. Let me know your thought in the comment below.

  • Do like this blog and follow me!

  • Also, you could follow me on Twitter

Thanks for readingđź’›

NFT
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