what are NFTs

What are NFTs? Why are they famous and worth so much?

The NFT has become a buzzer word in today’s economy, An NFTs is a Non-Fungible Token, it is a unit of data that is stored in a digital ledger, commonly known as Blockchain (digital asset). Let’s make it a bit more clear and simple

What are NFTs?

Non-Fungible Token is unique, which cannot be replaced with anything else.

For instance, currency Bitcoin, Ethereum can be traded one for another that remains the same whereas the painting of Monalisa is non-fungible, the painting is unique, we may have the pictures and screenshots or the replications of the painting but the original is unique.

The fungible token contains the same value, whereas the non-fungible hold a unique level of value based on its identity.

The NFTs can represent an image, audio, games, fashion, video and other types of digital files, these are certified with proof of ownership. Others can have the representation of the original, but the original is owned by the authenticated owner.

The NFTs make it easier for the audience to connect with artists, which could simplify the transactions and create a new marketing economy.

The CEO of Twitter, Jack Dorsey has sold out his tokenized version of his first tweet “just setting up my twttr” for $2.5million.

A clear picture of NFTs

pic of NFTs

Each non-fungible token contains a unique and non-transferable identity to separate it from other tokens, One NFT can be combined with other NFT to form another unique NFT.

Similar to Bitcoin the NFTs also contain ownership details to transfer between token holders, If need they can also add metadata to the assets in NFTs. For instance, the artist can add his digital signature to his artwork in the metadata.

All the NFTs are not equal, it is clear when comparing to the token standards, these standards are a set of rules and the functions that are capable of doing.

There are many famous use cases for NFT, one among the following is crypto kittiesthese are the digital representation of cats with unique identification on the Ethereum blockchain. In a short span, they ranked up to $20million.

How do NFTs work?

The physical assets or arts can be valuable as they are unique, whereas the digital assets can be duplicated or tamper.

With NFTs the digital assets can be tokenized to create the digital certificate and can be sold out. These records are stored in a digital ledger which is maintained by thousands of computers so they cannot be forged.

Why are they famous and worth so much?

The NFT can be anything that is in digital form, by enabling the representation of physical assets into digital. The anticipation here is using the technology to sell this digital asset.

It can be a tweet, image, or gif the 50-sec of video by Grimes was sold out for $390,000, Artwork by Beeple was paid $69 million. The Gucci Ghost was sold out for $3600. An animated gif of Nyan-cat sold out for more than $500,000.

Though we can download these images and videos from the internet, the ownership of the work lies only with one person.

The advantage of NFT is market efficiency. This process removes the intermediaries, which improves the business process.

These are very good at identity management, it lies in the creation of new markets and many forms of investment.

A virtual reality platform on Ethereum’s blockchain has already implemented this concept. As NFTs are integrated within financial infrastructure, tokenize the land, differs in value and location in the physical world.

If a person is an artist, it provides the best platform to sell his artwork, if you have super cool ideas it can be sold out for the best price, which is otherwise not possible in the market.

These NFTs allow you to earn a percentage every time NFT is sold or changes hands.

If you are a buyer then you can support the artist u like. You will have the rights to the artwork that has been purchased, you can post it online, set it as a profile for anything you want.

In the case of the speculator, he can purchase the NFT and sell it if the price goes up and make a profit.

Why would one like to pay million dollars for trading cards?

People like the fine art collecting, consider the pokemon cards, logan paul sold the NFT for $20,000.

The traders can sell the NFTs and ask for any currency in return.

How to create NFTs?

how to create NFTs

One can create their own NFTs, it is a simple process to create a gif or image, it does not require one to be an expert in the crypto industry.

Before we start creating the NFTs, one should select any platform of blockchain. Ethereum is one of the best blockchain services for NFT, Such popular platforms are:

  • Binance smart chain
  • Tron
  • EOS
  • Polkadot
  • Tezos
  • Cosmos
  • WAX

Each has its token standards, wallet services, and market places. For instance, the NFT created on Binance smart chain should be sold only on that platform and others will not be supported.

As most of the NFT is part of Ethereum, it has the largest NFT ecosystem.

An Ethereum wallet supports the standard NFT-721 such as a coin base wallet.

One would require $50-$100 Ether in their coin base wallet, one can buy those from the platform with dollars or fiat or it can be purchased from a cryptocurrency exchange.

Once we get there, we can connect our wallet and upload the files that need to be converted into NFTs.

Ethereum NFT market places include

These allow you to create your own NFTs, before that you have to become a registered artist.

  • OpenSea, Rarible or Mintable have the create option.
  • The user will be redirected to a page, where he needs to connect his wallet to the marketplace, One will be asked to enter the wallet password and connect the wallet to the marketplace.
  • One has to digitally sign in the Ethereum to authenticate the ownership of the wallet address.
  • On the top right corner click on the create button and navigate to “My collections”, then tap on the click button.
  • A pop-up appears where you can upload the file and specify the description.
  • Now we have created a folder for the new NFT
  • An image will appear for the collection, then you can add the banner image by clicking on the edit icon on the top right corner.
  • Now we will be able to add out the first NFT, Click on the “Add new item” button and sign another message using your wallet.
  • You will be redirected to a new window, where you can upload the image or file to be converted into NFT.
  • Users can also add special traits and attributes to improve the uniqueness of your NFT.
  • The seller can lock the content to be viewed only by the purchaser it can be passwords or access certain services to discount codes and contact information.
  • Once this process is done, click on the “Create” button and sign another message in the digital wallet for authentication for creating NFT.
  • Now, the artwork will appear in your collection. 

How much it costs to make NFTs?

The cost to make the NFT depends on the platform one will choose, OpenSea will not charge anything whereas some other platforms charge.

In the Ethereum platform, they charge a fee know as gas, this Ethereum gas is the amount that is required to act on the blockchain. This cost varies depending on the network congestion.

If more people are transacting value over the network at a time, the higher the price of the gas fee and vice versa.

Downside of NFTs

One of the downsides for these NFTs is the image quality can tamper, changes in file format, websites may go down, they may forget the passwords of the wallet.

The rotten thing is the NFTs uses blockchain technology that results in the usage of a lot of electricity

The NFTs related to cryptocurrencies results in the emission of greenhouse gases

As a result, few artists have decided to not sell their artworks due to the effects caused to climate change.

One can save their NFTs in their digital wallet, it provides a smooth platform for the artist to trade with the audience directly without the need of any intermediaries.

To read more interesting articles like this, check them out at SocialMirror. If you have any queries or doubts, feel free to ask me in the comments section below!

Jaahnavi
Hi, I'm Jaahnavi. I work on Cyber-Security projects and in my free time, I do blogging. Currently pursuing MCA from Sastra University