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What Is An NFT, Is it Different From Crypto, How Does It Work?

NFTS, also known as Non Fungible Tokens, have suddenly grabbed the attention of the whole world. After cryptocurrencies suddenly became mainstream, NFTS seemed to have followed suit immediately after. One NFT project even got sold for 69.3 million dollars. How crazy is that? Thanks to the rise of NFTs, many artists, individuals, and businesses have become more interested in developing and owning NFTs. However, since NFTs became popular recently, many people are not fully aware of what they are and how they work.

Some people even confuse NFTs with cryptocurrency. Similarly, some people have questions regarding buying NFTs, while others want to know how they can develop their own NFT collections. That’s why, in this article, we are going to discuss everything you need to know about NFTs, including what they are, how they work, how they are different from crypto, how you can buy some, and most importantly, how you can develop & launch your own NFT collection. So, without further ado, let’s dive into it!

What Are NFTs?

NFTs are virtual assets that can be owned. They can be bought, sold, or traded, and their value can increase or decrease over time. They are often related to real-life music, games, events, or even classic art. The reason why the concept of NFTs is so closely linked to cryptocurrency is that NFTs are bought and sold using crypto mainly.

The main appeal of NFTs lies in the aspect of ownership. Whether it's a video clip, an image, or an artwork, once it becomes an NFT, it will have its own unique identification code. What people are buying is the ownership of that code. While the image or video can be downloaded by other people, only one person will own its unique identity code. This concept is completely opposing how digital art is usually seen. Digital art, unlike classical art, can be duplicated limitlessly, while a real-life art piece can only be owned by one person. NFTs seem to bring that aspect of ownership to digital art.

How Are NFTs Different from Cryptocurrency?

To find out how NFTs are different from cryptocurrency, it will be helpful to know what exactly the term ‘Non Fungible Token’ means. Cryptocurrencies and real-world currencies are ‘fungible’, which means their value remains the same across one another. One Ethereum will be equal in value to another Ethereum, and similarly, one dollar will always be equal in value to another Dollar. Fungible currencies can also be exchanged with one another.

When it comes to NFTs, each NFT has its own unique value. It cannot be traded for another NFT for the same value (unless the owners do it with mutual agreement). Every NFT has its unique cost as well as its unique code. While NFTs are also stored on Blockchain, like cryptocurrencies, they are not interchangeable. Due to this, NFTs are completely different from cryptocurrencies. Their only similarity is that they’re both connected to a Blockchain.

How Does an NFT Work?

Just like cryptocurrencies, NFTs are built on a Blockchain. All NFT transactions occur on a Blockchain, and these transactions are recorded in the Blockchain ledger. Most commonly, NFTs are hosted on Ethereum Blockchain, but they can be held on other Blockchains as well. NFTs can be created from things taken from the real world or things that only exist in the digital world. There are numerous formats that are minted into NFTs. These include music, GIFs, video clips, digital art, avatars, and even tweets.

While an NFT can only be owned by one person at a time, this ownership can be transferred. For example, you can buy the ownership of a certain NFT for 0.05 Ethereum and later sell it for 0.1 Ethereum. By trading NFTs, people can gain a lot of profit. Even if you are an artist that created an NFT, once the NFT is sold, you no longer have any rights over your art. It can be sold by the new owner.

What Are NFTs Used For?

NFTs have created a completely new and much-needed market for digital artists. Thanks to the NFTs, artists have gained a unique and vast opportunity to make money off of their work. Before NFTs, artists would have to rely on either galleries to accept and display their art or on social media algorithms which were not well suited for circulating art. As for selling their artwork, they would have to participate in auctions or wait for commissions.

Thanks to NFTs, artists, especially digital artists, can directly sell their work and gain profit from it. They can manage their own work instead of having to rely on external organizations. NFTs have brought a new wave of appreciation for digital art, and we can see new and unique styles of digital artwork emerging every day. Aside from making money for personal gain, NFTs have been used in charity drives by large companies as well.

How To Buy NFTs?

To get started with the buying and selling of NFTs, the very first thing you'll need is a wallet to store cryptocurrency. Digital wallets allow you to safely store and transfer cryptocurrencies and other digital assets. Once you have a reliable wallet, you will need to buy some crypto like Ethereum. This can be done through PayPal, a debit card, as well as a credit card. After you are a crypto owner and have a secure wallet, you are ready to buy NFTs. Up next, you need to find a good marketplace to purchase an NFT. Let's look at some of the most popular NFT marketplaces!

  • OpenSea: OpenSea is an extremely popular NFT marketplace. You can create an account on OpenSea by connecting your wallet to the website. Open sea mostly supports Ethereum. You can find a wide range of NFTs here, from popular artists to new ones and from highly expensive NFTs to very cheap ones.

  • Rarible: Next, you can look into Repairable. This marketplace also supports new artists in selling their NFTs. A unique feature of this marketplace is that it allows some NFT holders to add to the community rules and change their fees etc.

  • Foundation: Foundation is an NFT marketplace that recruits artists and invites them to sell their artwork as NFTs on their platform. You won't find many amateur artists there, but you can buy and sell NFTs regardless.

Should You Invest In NFTs?

An NFT’s value entirely relies on the eyes of the beholder. An NFT you buy can be of no or little value to another person. But the opposite can be true too. A certain individual might have their heart stolen by an NFT you own, and they could be willing to pay a hefty price for its ownership. Due to this, NFTs are unpredictable. So, it's generally recommended that you only invest in NFTs as much as you can afford to. Also, you should only buy an NFT if you truly like it and want to own it because there is a chance you might not be able to sell it ever.

That being said, if you truly want to invest in NFTs, you should definitely do a ton of research on them. You can check out how they can be taxed and whether the cryptocurrency you're using has a stable future.

Can You Develop Your Own NFT Collections?

It is entirely possible for you to develop and sell your very own NFT collection as well. You will only need to develop some form of digital work, whether it's an illustration, a 3d model, a gif, or even a video clip taken from a movie. Once you form a collection based on a certain theme, you will need to have some knowledge about Blockchains and how they work. You can either take the time and learn in-depth about crypto, NFT marketplaces, and how to place an image on a Blockchain, or you could take the easier option and take help from experts. That’s where we come in.

Here at IIInigence, we can help you design a fully custom NFT collection according to the crypto community standards and launch it on your desired platforms. Working with us would allow you to increase your chances of success by a thousand times, as we have been in the Blockchain space for more than 10 years. We have successfully designed and launched hundreds of unique NFT collections, with each collection containing thousands of unique NFTs. What's more, we can enhance the value of your NFTs by assigning them different levels of rarity. Most importantly, if you want to develop an NFT to be used in a specific game, Metaverse, or platform, we can help you with that as well.

Final Thoughts:

In these fast-evolving times, many trends quickly come and go. However, sometimes, new technologies and concepts are introduced that change the game and stay for a long time, just like Virtual Reality led to the creation of the Metaverse and cryptocurrencies became a mainstream way of investing money. With people buying Metaverse avatars as NFTs and even virtual clothes for their virtual avatars, it seems like NFTs are here to stay for a long while. It’s worth learning about these new emerging technologies as we will watch them transform with our own eyes in the coming years.

We hope this article gives you all the answers that you've been searching for related to NFTs. If you still have any questions, feel free to let us know in the comments section, and we will try our best to answer them as soon as possible. Plus, if you want to develop and launch your own NFT Collections, we can help you in this regard as well. Simply get in touch with one of our experts, discuss your ideas, and see how we can help you turn your ideas into reality.