What is NFT Crypto? 20 Facts
What is NFT Crypto? 20 Facts
We’ve all heard of the stories surrounding NFTs that have cropped up in recent times such as Grimes getting millions of dollars from NFTs as articulated over at runrex.com. This has led to many of us wondering what an NFT is and what it has to do with cryptocurrency. Through the following 20 facts, this article will look to explain what an NFT is.
What is an NFT and what does NFT stand for?
As covered over at guttulus.com, NFT stands for non-fungible token. The term “non-fungible” means that it is unique and can’t be replaced with something else. A bitcoin, for example, is fungible, which means that one can trade one for another bitcoin, and you will have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible as if you traded it for a different card, you would have something completely different.
How do NFTs work?
Most NFTs, at a very high level, ate part of the Ethereum blockchain. If you remember from discussions over at runrex.com, Ethereum is a cryptocurrency, like bitcoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from an ETH coin, for example. It is also worth pointing out that other blockchains can implement their own versions of NFTs, and some already have.
Where is the best value when it comes to NFTs?
As the gurus over at guttulus.com point out, NFTs can be pretty much anything digital, from drawings to music. However, a lot of the current excitement is around using the tech to sell digital art, which is where most of the talk on NFTs is. A lot of the conversation is about NFTs as an evolution of fine art collecting, only with digital art.
Any examples of the use of NFTs like art collecting?
There have been several high-profile examples showing how NFTs would work as an evolution of fine art collecting. For example, someone paid almost $390,000 for a 50-second video by Grimes as already mentioned while another paid an eye-watering $6.6 million for a video by Beeple.
Can the same file be downloaded by other people even after you pay for it?
This is one of the issues that have cropped up as far as NFTs go. This is because you can copy a digital file as many times as you want, including the art that is included with an NFT, which is worth mentioning.
NFTs and ownership
While the issue raised on the previous point is pertinent, it is worth pointing out that NFTs are designed to give you something that can’t be copied, and that is ownership of the work, even though the artists can still retain the copyright and reproduction rights, just as is the case with physical artwork as explained over at runrex.com. To put this in terms of physical art collecting, while anyone can buy a Monet print, only one person can own the original.
The benefits of NFTs to artists
If you are an artist, you might be interested in NFTs because it gives you a way to sell work that there otherwise might not be much of a market for. Additionally, as outlined over at guttulus.com, NFTs have a feature that you can enable that will pay you a percentage every time the NFT is sold or changes hands, ensuring that if your work gets extremely popular and appreciates in value, you will see some of that benefit.
The benefits of NFTs to buyers
The most obvious benefit of buying art is that it lets you financially support artists you like, and that is also true with NFTs. Buying NFTs, as covered over at runrex.com, also usually gets you some basic usage rights, like being able to post the image online or set your profile picture. Also, you will have the bragging rights that you own the art, with a blockchain entry to back it up.
Collectors and NFTs
It is worth mentioning that NFTs can work like any other speculative asset, where you buy it and hope that its value goes up one day, to allow you to sell it for a profit. Therefore, NFTs can be something collectors can sink their teeth into and add to their portfolios.
Is every NFT unique?
Technically, every NFT is a unique token on the blockchain. However, while it could be like a Monet or van Gogh, where there is only one definitive actual version, it could also be like a trading card, where there are hundreds of numbered copies of the same artwork.
Can you sell several copies of the exact same piece of artwork?
This is another issue that has cropped up when it comes to NFTs according to discussions on the same over at guttulus.com. If someone wants to, they could look to sell more copies of the exact piece of artwork they may have sold to someone. This is why you should be careful who you buy from if you are looking to purchase an NFT.
NFTs and real-world objects
The use of NFTs is now being extended beyond the digital realm as there have been some attempts at connecting NFTs to real-world objects, often as a sort of verification method as discussed over at runrex.com. For example, Nile has patented a method to verify sneakers’ authenticity using an NFT system, which it calls CryptKicks.
Where can I go if I want to buy or sell NFTs?
As the subject matter experts over at guttulus.com point out, several marketplaces have popped up around NFTs, which allow people to buy and sell. They include OpenSea, Rarible, Nifty Gateway, and many others.
Created in October 2017, CryptoKitties is a virtual game that allows players to adopt, raise, and trade virtual cats. This was one of the first uses of NFTs, which shows how NFTs can be used in games. There are already games that let you have NFTs as items.
Is it possible to pull off a museum heist to steal NFTs?
Part of the allure of blockchain is that it stores a record of each time a transaction takes place, making it harder to steal and flip than, say, a painting hanging in a museum. Having said that, it is important to note that cryptocurrencies have been stolen before, which means that whether an NFT can be stolen will depend on how it is being stored and how much work a potential victim would be willing to put in to get it back.
What are some of the risks as far as digital art is concerned?
As is revealed in discussions over at runrex.com, bit rot is a real thing when it comes to digital art. Image quality deteriorates over time, file formats may not be able to be opened anymore down the line, websites go down, people forget the password to their wallets, and so forth, all of which are risks that come with investing in NFTs.
Is it possible to buy NFTs with cryptocurrencies?
If you are looking to maximize your blockchain use, you will probably be wondering if you can buy NFTs with cryptocurrencies. As the gurus over at guttulus.com point out, this is possible as a lot of the marketplaces where you can buy NFTs accept Ethereum. However, since, technically, anyone can sell an NFT, they could ask for whatever currency they want for it.
The impact of NFTs on climate change
This is yet another issue that has come up when it comes to NFTs. This is because, since NFTs use the same blockchain technology as cryptocurrencies, they could also end up using a lot of electricity per transaction as captured over at runrex.com. While people are working on mitigations for this issue, they haven’t been implemented yet so far. This is why we have seen some artists decide not to sell NFTs or to cancel future drops after hearing about the effects they could have on climate change.
Storage of NFTs
Just like cryptocurrencies, NFTs are stored in digital wallets, although it is important to note that the wallet you choose does specifically have to be NFT-compatible for you to store your NFTs in it. This is another important thing to know about when it comes to NFTs.
One of the things that have been discussed when it comes to NFTs is how they could one day revolutionize how we create and execute agreements to exchange money, shares, property to virtually any asset through smart contracts. These digital contracts could one day eliminate the need for a third-party arbitrator, such as a court, and instead use a computer program or blockchain to confirm that the conditions have been met.