Are you hearing the word NFT in conversations? What is NFT? NFT stands for Non Fungible Token. In plain English, they are unique or a limited run of a file or digital asset that represents a real-world object like piece of art, music, in-game items and videos and they exist in a cryptocurrency network.
In short, NFTs are digital assets that are unique in a way that they cannot be broken down into smaller values or pieces like currency tokens. The easiest way I can think of them is akin to sports trading cards.
This uniqueness and the blockchain record keeping creates what economist call a digital scarcity and thus creates value for the owner of that asset.
A vast majority of the NFT tokens are built on the Ethereum network, but others such as NEO, EOS, and TRON following close behind.
Where is NFT used for?
This is the best part is that these tokens can be used for a variety of things such as digital art, gaming skins, trading cards, or just about any type of digital collectible, etc. So any item that needs to be unique, NFTs are a very simple way to prove it and it’s ownership.
A great example is that if an artist creates a piece of art, many copies can exist but only one original. So when you buy an NFT art piece you are buying the only one that is verified and signed by the artist.
If you want to learn How to buy and sell NFTs for Profit check our guide.
Right now Non-Fungible Tokens are used mostly in the art and music space, where artist create digital art-work that are sold as Tokens.
How can I invest in NFTs?
There are many ways you can invest in this and it is growing each week.
If you are a collector or just think a digital item will rise in value, you can buy that asset on one of the Best NFT Marketplaces for a given price and then hold on to it for awhile and then resell it at a later time and generate a profit for yourself.
The prices, much like everyday physical objects that we buy, are based on supply and demand and the top coins right now are:
- Theta (THETA)
- Enjin Coin (ENJ)
- Decentraland (MANA)
- Flow (FLOW)
- Chiliz (CHZ)
Where is the value in Non-Fungible Tokens?
Ok let’s break this value proposition down. For example, you can easily watch a video on YouTube, you can see a piece of art in a museum, you can see almost anything on the internet and it can be easily repeated at almost a zero cost.
But owning that one asset is what makes an NFT unique and valuable. Being the only person owning an item, is what it’s all about, and then having a smart contract on the blockchain defines it as yours and provides that irrefutable evidence of ownership Think of the smart contract like a title to your car or the deed to your house.
Some of the biggest companies in the world like the NBA, with their NBA Top Shot, are already in the NFT game with unique videos that have sold for more than $535,0001.
Jack Dorsey, the CEO of Twitter, sold his first-ever tweet. The price was $2.9 million at the time of writing this article.2
It seems like everyone is getting in on the action and making some big bucks in the process.
Where can I store my NFTs
Now the question becomes where to I store this ownership token. Just like your paper documents, you can store it in a safe or wallet. In this case, to store your tokens you will need a wallet that supports ERC-721 tokens. Some of the most popular wallets are:
Just go to one of the marketplaces, get the ones you are interested in, and send it to your wallet, and just like that you, and only you, are the owner of an original piece of art, music, some kind of ingame skin or maybe even a tweet.
Security of this wallet is also important. So make sure the secure your wallet properly.
The Hype? What exactly is an NFT and is it worth it?
In our opinion, NFTs now are similar to Cryptocurrencies in 2012. Few people heard about them but most of them knew it was the next big thing.
We think something similar is going to happen with NFTs. The best thing is to learn about them, maybe get some in your wallets, because we believe that they are here for the long haul.
The Crypto world is growing rapidly at the moment and NFTs are one of the reasons why. Many institutional investors are jumping on the bandwagon as well as retail investors. It would be a shame to miss out on this.
Of course, and this is very important, never forget to do your own research, stay safe and have fun out there and make sure you check with your attorney, accountant, and/or tax adviser.