NFTs: What You Should Know [2022]

If you pay attention to the end of this short article, you should be able to understand NFT, how they work, and what value these items offer you.

If you have been following the crypto space for some time, you must have picked one or two things about the NFT craze. Even if you are not an active player, your ears should have caught some bits of the hype. So, what is an NFT that has everyone raving on and fighting tooth and nail to get into the ecosystem? If you pay attention to the end of this short article, you should be able to understand NFT, how they work, and what value these items offer you.

What are NFTs?

As a newbie to the NFT space, I believe that you must understand what it means before diving into it entirely. NFT stands for Non-Fungible Tokens but first, what do we mean by something being fungible or not?

When we say something is fungible, it is replaceable or identical to interchangeable or identical. In cryptocurrency, we can compare with tokens. You can swap Bitcoin for Ethereum or buy a fraction of a coin. However, when we say an item is Non-Fungible, it means that it is unique and cannot be replaced. In most cases, there is only one original copy of it.

Non-Fungible Tokens (NFTs) represent digital assets on the blockchain with smart contracts securing their uniqueness and ownership. Hence, only one person can own an NFT simultaneously, while no one can also buy a fraction of an NFT. NFTs can be digital arts, tweets, music, or sometimes collectibles. Although NFTs popularly started being recorded on the Ethereum blockchain, the industry has expanded into other cryptocurrencies, including Solana, NEAR Protocol, and Cardano.

How NFTs Work

One thing that makes NFTs different from regular assets is exclusive ownership. So, what exactly do this system get to provide technology in making items unique, intangible and solely owned by one person at a time.

NFTs exist on the blockchain, and hence, they need cryptocurrencies to work. However, you should note that NFTs are usually enabled by smart contracts cryptos like Ethereum, Polygon, Solana, or Cardano. For Non-Fungible Tokens to work, they need to take advantage of the ability of their smart contracts to secure, and provide unique digital ownership. By doing this, an NFT creator can seamlessly store his or her asset on the blockchain. To understand how NFTs work better, watch the video below.

How To Create, Buy, and Sell NFTs

Now, you probably know what NFTs are. However, how can you get started creating, buying, and selling NFTs? To be honest, there are several ways to do this as several NFT marketplaces exist but a brief look at marketplaces like OpenSea, MagicEden, Rarible, or Solanart can give you a good headstart. Still, I will mention the steps you need to get through the process.

Step 1: Visit a NFT marketplace, and connect your cryptocurrency wallet. If you decide to use an Ethereum-based NFT, you would need to connect your wallet on a tool like MetaMask. However, if you choose a Solana-based one, a Phantom wallet would do just great.

Step 2: Create your own NFT, upload and follow the process to publishing or choose one from a collection to buy.

Step 3: Publish your NFT, or complete the buying process on the marketplace via your crypto wallet.

Note: For Ethereum NFTs, you would need gas fees that could be a bit above normal while Solana transaction fees are almost negligible.

Should I Buy Non-Fungible Tokens (NFTs)?

Even though NFT marketplaces have recorded billions of dollars in trading volume despite rising to popularity in a short while, investing in them is not for everyone. Of course, the ecosystem offers incredible opportunities, and in some cases, financial breakthrough, there are some drawbacks. First, you should know that not every NFT will increase in value or make you good money. While you can consider factors like community, rarity, or utility, some can still dump on you. This, however, does not mean you should not buy NFTs or invest in them. Still, be careful. On a second thought, NFTs can help you become better in your knowledge of blockchain technology. Like most-crypto related investments, NFTs can show high volatility potentials. I suggest that you do your own research, and invest only money you can afford to lose.

NFTs: Final Thoughts

Whether you have decided to buy NFTs, or create yours, I believe that understanding them will do you a lot of good, and this article provides a helping hand. Nevertheless, getting more fundamental information is also excellent. YouTube videos from creators, experts, and having your own experience can help you improve in the space.

If you are a complete beginner, or willing to know more, here are some other articles to help you in your journey. Selah

Beginner’s Guide to NFTs: What Are Non-Fungible Tokens?

A Complete Beginner’s Guide to NFTs

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Victor Olanrewaju

Bits and pieces on freelancing, copywriting, and web 3.0. When I’m bored, I share my thoughts on random subjects. You won’t find nice stuff here all the time.