What are NFTs? (Explained)
Whether you believe that NFTs are a passing fad or the next major technological revolution, you should know what they are. In this article we'll cover what NFTs are.
Non-fungible tokens (NFTs) took the internet by storm in 2021 and the attention has only slightly cooled since it burst into mainstream consciousness. Art and music are just two types of digital assets that have been selling for millions of dollars. Whether you believe that NFTs are a passing fad or the next major technological revolution, read on to learn about what NFTs are.
What Does NFT Stand For?
NFT stands for Non-Fungible Token. An NFT is a digital asset that is unique, and cannot be replaced or exchanged for an equivalent. These assets can be anything from a digital artwork, video, music, 3D models, virtual real estate, and more. The uniqueness of NFTs is ensured by blockchain technology, which allows them to be tracked, verified and securely traded on a decentralized platform. Unlike traditional cryptocurrencies, NFTs are not interchangeable and the ownership of it is recorded on the blockchain.
What is an NFT?
NFTs are digital assets that are bought and sold online. They are backed by the same technology that underlies cryptocurrencies but are a distinct digital asset class. NFTs can represent real world objects and be linked to art, music, GIFs, virtual avatars and videos. NFTs were first created in 2014 but since then the NFT market has grown to be worth $41 billion in 2021. To put this in perspective, the global fine art market is worth about the same amount. NFTs can be created in a process called minting on multiple blockchains, such as Ethereum and Polygon.
Why are NFTs Important?
NFTs use blockchain technology to create digital scarcity and some NFTs are made to be one of a kind and most are part of a limited collection. Each NFT has a unique identification, can’t be duplicated and provides unhackable proof of ownership.
In contrast, digital objects that aren’t NFTs can be duplicated for free and thus have an infinite supply, undercutting its value. NFTs now allow the holder to prove that they own a specific digital asset.
Difference Between Fungible and Non-Fungible Tokens?
Fungible and Non-Fungible tokens (NFTs) are both digital assets that are stored on a blockchain. However, the main difference between the two is the level of uniqueness and interchangeability.
Fungible tokens, such as Bitcoin or Ethereum, are digital assets that can be exchanged for an equivalent value. They are interchangeable and identical to one another, meaning that one unit of the token can be replaced by another unit of the same value. For example, one Bitcoin is the same as any other Bitcoin, and can be easily exchanged for another Bitcoin of the same value.
On the other hand, Non-Fungible Tokens (NFTs) are unique digital assets that cannot be exchanged for an equivalent value. They are not interchangeable and each NFT is distinct from one another. NFTs are used to represent digital ownership of a unique item, such as an artwork, collectible, virtual real estate, and more. Their uniqueness is ensured by blockchain technology, which allows them to be tracked, verified and securely traded on a decentralized platform. The ownership of an NFT is recorded on the blockchain and it can not be replaced or exchanged with an equivalent.
In summary, fungible tokens are interchangeable, have the same value, and are transferable in equal amounts, while NFTs are unique, have a unique value and are not interchangeable.
Tips for NFT Creators and Brands
- Think about how you can benefit
NFTs have created a new monetization pathway for creators and artists. Instead of having to rely on an expensive middleman (ex. galleries, auction houses) to sell art and other creative content, creators can now sell it directly to fans and consumers online as an NFT. The blockchain technology underlying NFTs make it simple for creators and buyers to prove true ownership.
- Explore the market
Platforms such as OpenSea, Rarible and Looksrare are marketplaces that allow creators to sell NFTs using an easy-to-use user interface. This means you don’t need to know how to code to sell NFTs. Keep in mind that most marketplaces will charge a percentage of the sale price.
- Use dApps to create your own NFTs
Metacommerce is creating a platform that lets creators easily mint their own NFTs, manage their own NFT collections and directly control their relationship with their fans without needing to know how to code.
- Do your own research
NFTs are still new and it’s important to do your own research to understand the best strategies for launching a successful NFT project! Metacommerce will be publishing guidelines and courses to help creators launch their own NFT projects – follow us on Twitter @metacommerceNFT to stay updated.
NFTs are an exciting new technology for creators and fans alike. Since their creation in 2014, NFTs have grown into a $41 billion market by 2021 which is expected to reach $122 billion by 2028. For artists and creators, NFTs can open up a new way of interacting with fans and to reclaim value in their artistic content. To stay updated on how Metacommerce is helping creators, follow us on Twitter @metacommerceNFT