NFTs, What is NFTs, and Should You Invest in NFTs
Know all about NFT (Non Fungible Token): Information about NFT, what is the meaning of NFT. How does NFT work? Why do some NFTs cost in the millions? Should you invest in NFTs as an investor? Everything about NFTs is given below.
About NFT
If you are reading this article of ours, then it cannot be that you have not heard about NFT i.e. Non-Fungible Token. NFT's latest promotion is Bored Ape Yacht Club, which is basically an art collection of 10,000 different Bored Ape images.
Do you know how much these apes will cost you? The minimum price to buy any one of these monkeys starts from $ 200 thousand i.e. about Rs 1.5 crore. But don't worry if you're stumped by this craze and don't understand why people are spending so much money on simple pictures like bored apes.
If you want to know what are NFTs? And why are people going crazy for it? Why do they hold so much value? And whether you should invest in NFTs or not. So, NFT stands for Non-Fungible Token, which basically, refers to any item that can be interchanged with any other item of the same type.
For example, if I have a 10 rupee note and you also have a 10 rupee note, I can exchange these notes, and still, the amount or value kept with us remains unchanged. These two notes are similar and interchangeable. And all 10 rupee notes in India are the same, they have the same value, similar properties, and similar features, which makes them interchangeable and replaceable.
On the other hand, if we talk about Pain Monalisa, then this painting is a unique work in itself. It has its own non-replicating properties, characteristics and you cannot exchange another painting with it in return. Simply because it is a unique piece of art and not interchangeable. Making the Monalisa an irreplaceable object, as it has its own properties and cannot be replaced or replaced by any other object. And that's what we mean by non-fungible.
What does NFT mean?
NFTs or non-convertible tokens are pieces of digital content connected to a blockchain such as Ethereum or Solana. And these are Ethereum and Solana, the same blockchain platforms where you transact their respective cryptocurrencies.
But if I talk about these cryptocurrencies like bitcoin or ethereum, they are fungible. The value of one bitcoin is the same as that of another bitcoin, you can interchange them while on the other hand, NFTs are unique and not interchangeable, meaning that no two NFTs are the same.
If I talk about Bored Apes Yacht Club, it is a collection of 10,000 different rugged apes digital arts. And each of this digital art is an NFT. All these apes are unique, not interchangeable, and therefore non-fungible. When you purchase an NFT, you own the NFT of that digital art or that digital content. You are the sole owner of that unique NFT.
And recently, many celebrities like Stephen Curry, Post Malone, Mark Cuban, Jimmy Fallon bought their own bored apes, which means they are now the sole owners of those boring Ape NFTs. And that bored ape is a unique NFT and no other bored ape like it exists.
What is NFT?
In simple language, NFT means irreplaceable token. Irreplaceable means that a commodity cannot be exchanged for another commodity because it is unique. For example, one piece of art is not equal to another, both have unique qualities. For example, a dollar or bitcoin is always equal to another dollar or bitcoin. But one NFT is always different from another NFT because both are unique, reside on a blockchain, and represent ownership of unique objects.
It can be copied and distributed easily, so how can you prove who is the original owner. When everyone has an identical copy of the file. NFT solves this problem. Imagine that you have created a piece of digital art, essentially a jpeg on your computer. You can make this jpeg file an NFT from it.
NFT that represents your art. It contains a bit of information about it such as a unique fingerprint of the file, a token name, and a symbol. This token is then stored on a blockchain and you become the owner of digital art. Now you can sell that token by creating a transaction on the blockchain.
How does NFT work?
Blockchain ensures that this information can never be tampered with. It also allows you to track who is the current owner of the token and its current price, as well as whether it has been sold in the past. It is important to note that the artwork itself is not stored within the NFT or blockchain. Only its attributes such as the file's fingerprint or hash, a token name and symbol, and optionally a link to a file hosted on IPFS.
When you buy an NFT that represents artwork you do not get a physical copy of it. Everyone can download a copy for free every time. NFT only represents ownership and is recorded in a blockchain. So no one can tamper with it. Whereas the token owner is the owner of the original artwork.
The creators of NFT retain copyright and reproduction rights so that an artist can sell their original artwork as NFT. But he can still sell prints, in addition to digital art, NFT can also be used to sell concert tickets or domain names. Rare in-game items, real estate, and basically anything that's unique and needed.
For example, the founder of Twitter sold his first tweet as NFT, anyone can see that tweet on his profile but now only one person can own it. And that person paid more than $2.9 million for it.
For example, I can also make an NFT. I can make a youtube video as NFT, then you can buy it and become the owner of this video. Even though it's now free for everyone to watch.
Why are some NFTs worth millions?
Their price is determined by how much people are willing to pay for it. If I am willing to pay five hundred dollars for a particular NFT then that NFT is worth five hundred dollars. Prices are demand-driven so be careful an expensive NFT becomes worthless if no one wants to buy it.
Should you buy or invest in NFTs as an investor?
If you ask for my suggestions, I think the NFT industry has a lot of potential in the long run. However, I think that of all the NFTs that exist now, more than 99% will not hold any value in the future. And a very small number of valuable NFTs will remain for a long time. And all valuable NFTs are sold at such high prices that you or an average investor like me cannot afford them.
Even if we give all our money, we will not hold back from buying them. Hence, in my opinion, investing in NFTs right now may not be the best idea. But I understand that the NFT phase is extremely exciting and you should feel like you want to embrace it. In that case, for the sake of experimentation or just for the thrill of it, you can buy an NFT.
An NFT that you can afford. Invest in NFTs even in such cases as if it is not an investment but you are just buying an item for yourself. Invest a very negligible amount of your portfolio in NFTs.
NFT FAQs
What is the Full form of NFT?
NFT full form is a Non-fungible token.
What Does NFT mean?
NTFS or non-fungible tokens are pieces of digital content connected to a blockchain. it's digital art.
What technology is NFT based on?
NFT is based on Blockchain Technology.
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