What is an NFT and why is it a really valuable asset?

 

Introduction

NFTs, or Non-Fungible Tokens, are one of the most exciting and valuable assets in cryptocurrency today. However, many people aren’t exactly sure what they are or why they’re so important. To understand NFTs, we first need to understand exactly what they are based on and how they can be used in digital blockchain environments. In this article, I’ll cover some of the basics behind NFTs in order to help you understand why they’re as popular and valuable as assets for people all over the world.

What are NFTs?

NFTs are non-fungible tokens. Fungible means interchangeable or consumable; something fungible can be broken down into small parts without losing its usefulness. The two most well-known examples of fungible items are most forms of money and oil. Bitcoin, for example, is considered fungible since one bitcoin can be cut up into several parts and still retain its value as a currency. When you say one bitcoin, you’re referring to anyone coin among thousands or millions of other identical coins that could substitute for it in a transaction.

How does the value of an NFT change over time?

The value of an NFT can change based on market forces. If you’re thinking about investing in crypto-collectibles or non-fungible tokens (NFTs), you want to be familiar with how they work, how they’re different from regular cryptocurrencies, and what makes them so valuable. It will help if you know exactly what they are because there are over 100 kinds of ERC721 tokens that each have their own unique set of values. Here’s a quick rundown: What Makes Non-Fungible Tokens So Valuable?

The types of non-fungible tokens and their prices

The cost of each type of token varies depending on what utility it provides. The price also depends on how many people own that specific token. The more people who own one, for example, means its price will be lower as there are more sellers competing for fewer buyers. Inversely, tokens with high demand (and low supply) will have higher prices.

Getting paid in non-fungible tokens instead of fiat currency

Believe it or not, converting your digital goods into fiat currency like U.S. dollars isn’t always easy or straightforward. It also doesn’t help that there aren’t many examples of people selling digital goods for non-fungible tokens on public blockchains, so we still don’t know what (if any) benefits it will have for users of these apps. Luckily, non-fungible tokens are easier to use than you might think, which makes them well worth looking into now while they're still relatively unknown. Simply put, owning a non-fungible token means you own exactly one token that belongs to no one else in the world.

How to make and sell NFTs online

First, you need to build your own game. Second, you need to use something like OpenSea or RareBits in order to sell your items on their marketplace. Third, you need to use some kind of blockchain explorer so that other people can verify that they are unique items. And fourth, there’s no step four! You just made money selling things on OpenSea (or similar). That’s how easy it is! Just kidding - there’s actually a little more work involved than that. You will have to spend time marketing your game and building awareness of what kind of assets you plan on selling within it.

Future of NFTs

There are lots of reasons that NFTs will keep getting more attention over time. The number one reason will be to do with security; as people become increasingly aware of how vulnerable they are on centralized services, they will begin to lose trust in those companies (and rightly so). This loss of trust means people will start looking for alternatives and these alternatives have to have built-in security. Cryptographically scarce digital assets like NFTs fulfill exactly that role. Another big factor contributing to their popularity will be as a form of value exchange; with new technology allowing for fast exchanges between tokens, we'll see frictionless transfers from one person or company's account on one platform to another account on another platform, all using tokens.

Conclusion

An Asset Class for Our Digital Future: Non-Fungible Tokens are a new class of digital assets that will play a major role in shaping our digital future. An understanding of what they are, how they work, and how we can put them to use is essential for any 21st century professional. I hope you enjoyed reading my essay on NFTs as much as I enjoyed writing it!