The popularity of non-fungible tokens (NFTs) has risen tremendously over the past few months. Those who had realised the potential of NFTs at an earlier stage have made significant profitable investments. For those who didn’t, now might be a good time to learn about NFTs.
The hype surrounding NFTs has inspired several people to turn their art forms into these digital tokens. There is a similar rush among buyers for these ‘art-collectibles’.
In simple terms, NFTs are digital tokens in the blockchain network. Blockchain is the underlying technology in which cryptocurrencies work. The tokenisation of anything ranging from a JPG file to music to a tweet can be turned into NFT. It is any digital collectible that can be conceived to hold value. The name ‘non-fungible’ comes from the fact that each token is unique and cannot be exchanged for something exactly alike.
Jack Dorsey, the billionaire founder of Twitter, recently turned his first-ever tweet into an NFT, which was then sold for $2.9 million. There is no other NFT that is the same as this one, thereby establishing uniqueness.
Why The Hype Around NFTs?
The hype around NFTs is increasing exponentially, prompting several people to think about the use of NFT as an asset class. The classification has several advocators and several nay-sayers.
The success of NFTs is unprecedented; the previous success of Internet or any other technology could not be used to predict the popularity of NFTs. Just recently, a digital artwork was auctioned at Christie's. The NFT was purchased by a person under the pseudonym 'Metakovan' for a whopping $69 million. It was a trailblazer moment for advocators of NFTs.
The sale of the Christie’s artwork created a sort of ripple effect and several NFTs attracted million-dollar buyers. The huge amount of money flowing into NFTs prompted several people to jump into this space.
NFTs are the future of digital transactions. They are also at the core of the Arianee Protocol, which digitally verifies physical luxury products. The protocol proves that what you are holding in your hand is in fact what it purports to be. In addition to this type of assurance, the Arianee ecosystem also opens a new way for the consumer to communicate with the brand of each product. It’s an entirely new and augmented form of ownership, and it’s all verified on the blockchain.
The stories revolving around NFTs fetching millions of dollars have prompted a lot of buyers to take the plunge. There are many tutorials guiding people to pick a particular niche to buy NFTs and several websites have come up to cater to this demand. Here are a few things to know before transacting in NFTs.
How To Buy Or Sell?
There are certain things one should know before indulging in a buying spree. As a buyer of an NFT, one would need a digital wallet to store it in. No prizes for guessing the second requirement: one would need cryptocurrency. Ethereum (ETH) is the most accepted crypto by NFT providers. ETH could be purchased directly from the website providing the NFT or it could be transferred from any crypto exchange.
Some of the websites that cater to NFT purchases are:
Rarible: It is one of the most popular platforms to buy NFTs. It is an open marketplace for sellers to create NFTs and for buyers to buy them.
Foundation: This is similar to a community where artists must receive invites or "upvotes" from fellow artists or creators to post their art. Its exclusivity can be compared to the new audio-only social media platform ‘Clubhouse’.
OpenSea.io: This is a peer-to-peer platform where all one needs to get started is to create an account. Different categories of art forms can be browsed and chosen thereafter.
Several other websites offer the platform to get a piece of the NFT pie. The following websites also sell NFTs: SuperRare, Nifty Gateway, VIV3, BakerySwap, Axie Marketplace and NFT ShowRoom. India, too, has some such platforms.
There are two ways to go about selling NFTs. One way is that you own an NFT. Alternatively, the person selling an NFT can mint it. One can mint NFTs through sites such as OpenSea, SolSea, etc. After minting the NFT, one can list it on any of the sites for sale.
Is It Safe To Buy NFT?
It is important to understand that the value of NFT will be based on what someone is offering to pay for it. Demand will drive prices. All that being clear, one should consider buying an NFT after proper research as it is with any other form of investment.
The author is CEO and Co-founder of Mudrex, a Global Crypto Investing Platform