Perhaps you've seen NFTs on social media or in articles and didn't take the time to understand the hype. Or maybe you are aware of this and need more supplemental information to navigate into something that seems very alien. No matter how you got here – we are happy to have you! I promise to explain all of this as simply as possible in the simplest possible way. Follow me through the analogies, repetition, and information you probably never thought you needed – until now.
What is an NFT?
It is known as a non-fungible token, which means that each token is unique. It cannot be traded and is exclusive to the owner. To answer the follow-up question that you already have in mind, this token is not physical and is considered a digital asset. In simpler terms, each NFT is made up of unique lines of code that are stored in a blockchain. Blockchain is essentially an online database that is used multiple times, but is often used as the general ledger for Bitcoin transactions.
How are NFTs purchased?
If you're still on this journey, you can purchase NFTs using Ethereum: cryptocurrency. Do you remember the days of collecting baseball cards or vintage dolls? This is exactly the same concept – except digital. You can list and sell art, music, and everything in between through online marketplaces. Believe it or not, original tweets, memes, video games, and gifs are just a few things that have been sold and are currently still going strong in the NFT world.
How do NFTs actually work?
You have to lock and charge your crypto wallet if you want to buy NFTs as everything works digitally. Due to the increasing hype, there are now "drops" that not only arouse anticipation, but can also make bidding a very interesting experience for all eager and willing participants.
How can I make my own NFT?
It's very simple: create something, shape it (this is how your creation now lives on the Ethereum blockchain) and register to sell it on the various marketplaces. There are costs associated with the coinage and sales process that can vary depending on the platform used. You can also write clauses in your NFTs including, but not limited to, royalties when copies are sold.
What impact do NFTs have on the financial world?
When we think about how technology continues to innovate and change the world we live in, it definitely has its benefits. Let's use luxury handbags, for example. There are companies out there that literally take a design and make a replica at a lower cost. On the other hand, there are companies that are trying to trick consumers into believing their version is the original.
In this world of NFTs, there can be no more than one original. Blockchain technology acts as a recording system that assigns unique lines of code. notice? Since this is the case, you can sell the "replicas" but not keep the title (or monetary value) of the first and original version. Not only does this promote exclusivity, but it also completely eliminates the problem of investing without being 100% sure that a physical, tangible product is authentic. While many would have the ability to quickly find and view an NFT, you would have ownership of that digital asset and the ability to generate more income from it.
Are NFTs Really Worth the Hype and Why Are They Worth So Much?
There's no one-to-one answer here – it honestly depends on your personal comfort and long-term investment goals. Just like everything else, this is truly a hobby or subject of interest that may or may not be expensive to the general public. Investing in any capacity, whether it's stocks, options, or mutual funds, is a risk. While these have been around for a long time and generate solid data history, anything can happen in the world of investing. Since the pandemic, we may all be reluctant to admit that a tremendous amount of time is spent online. We had already incorporated social media scrolling, internet surfing, and reading into our routines, but that has increased due to our expanded host families.
However, the fluid mobility that we were used to (and which we may have taken for granted) was limited at the beginning of the pandemic due to travel restrictions. There was no way to attend live auctions, museums, or in-person events. With NFTs, it doesn't matter where you are in the world. Thanks to the World Wide Web, you don't have to set up travel accommodations to buy what you want. This is a huge advantage in the NFT arena as everyone has an equal chance of bidding on whatever is up for grabs as long as you have the cryptocurrency.
Should I Invest in NFTs?
They have been causing quite a stir lately with many tokens selling for millions of dollars. As with any other investment, take your time and explore before you dive in. As mentioned before, think of original paintings or collector's cards. This uses the same concept but uses digital storage so you cannot hack or compromise it because of the blockchain encoding. Physical items can withstand the elements and just plain old wear and tear that comes with aging. You never have to worry about your NFT being lost, bumped, injured or destroyed during a move.
While NFTs are now causing a stir, they're not necessarily new to the concept. In 2017, CryptoKitties was a game that allowed users to create, breed, and sell digital cats. Here in 2021, you can buy and sell anything under the sun using blockchain technology.
The opportunities for the NFT market to go through the traditional cycle of boom, collapse and stabilization show that it fits right in with developing countries of investment.
Register with Mint today
From budgets and bills to free credit scores and more
Discover the effortless way to stay on top of things.
Learn more about security