An easy guide to how NFTs work, NFT marketplaces, and more.
What is an NFT?
You might have heard (or seen) these three letters all over pop culture for the past year or so. Along with crypto and the metaverse, NFTs have skyrocketed in popularity among creators, consumers, and brands alike. So what is it?
NFT stands for ‘Non-Fungible Token’—a digital asset that’s unique, and therefore can’t be replaced or exchanged for anything else. NFTs are built with blockchain technology, allowing for a secure record of ownership as well as provenance.
NFTs can be anything from artwork to soundbytes, video clips, and even Tweets. They can be used to authenticate ownership of digital creations, which means that creators can monetize their work without the need for a middleman.
How do NFTs work?
When something is turned into an NFT, it’s given a unique digital identity recorded on a blockchain. This identity contains information about ownership, who created the asset, and who currently owns it. Since it’s on the blockchain, this record cannot be changed.
When an NFT is sold, the transaction is recorded on the blockchain. The buyer also receives a digital certificate of ownership, serving as proof of ownership and that the NFT can’t be replicated. As you can probably guess, this certificate’s value depends on supply and demand.
Why do people buy NFTs?
NFTs are a new way for creators to monetize their work without going through the traditional process that has proliferated for decades. NFTs have created a new market for digital assets, bridging the gap between maker and consumer. Aside from becoming a new way for independent artists to reach their fan bases more easily, it’s also a way for collectors or investors to own or trade unique digital assets.
That being said, the value of NFTs varies according to a handful of factors. Buyers consider the NFT’s rarity, current and future market demand, and its perceived value by other potential buyers. As NFTs exploded in popularity, we’ve seen collections sell out in seconds and bring in millions of dollars for creators, while other ones have failed to achieve the same in the same market. It’s important to keep updated with current trends and upcoming releases so you can stay one step ahead as you build your collection!
Where can I buy NFTs?
NFTs can be a great way to explore Web3 and discover cool work by all kinds of creators. However, investing in NFTs is considered a bit of a risk, especially since the market is volatile and often unpredictable. As always, the first step is to DYOR (do your own research) and weigh the pros and cons before making a move.
If you’re ready to buy your first NFT, NFT marketplaces are where you can do just that. Check out a few of them below:
- OpenSea is one of the biggest NFT marketplaces with a wide variety of NFTs, from collectibles to virtual real estate
- Rarible is a decentralized NFT marketplace that also offers its own governance token (RARI)
- BloctoBay is a decentralized NFT marketplace featuring NFT exclusives like MotoGP and NBA Top Shot
The market is ever-changing, with new and highly-anticipated NFT collections dropping all the time. That makes investing in NFTs all the more exciting. For example, there’s already a lot of NFT buzz on Aptos, a relatively new blockchain. Now’s a great time to get into the game—and who knows, maybe you’ll end up minting your own NFT, too!