Recently, we have been listening to many news about NFTs, like a 3-million-dollar tweet, a cat picture sold for hundreds of thousands USD, or some meme NFTs sold for even more.
So what are these NFTs, and how do they work?
In the physical world, we have assets like a car, house, bike, or maybe an ancient warrior’s helmet, which is one of a kind for this era and, as a collectible, may be worth a lot. On the other hand, in the digital world, we also have assets like paintings, songs, specific items, real estate in a video game, or the footage of some moment that occurs once in a lifetime. Of these assets, there are some replaceable, and some are not. Digitally there are some irreplaceable products, assets, paintings, cards, videos, music, or any other gifts that cannot be traded or given usually, which we have to trade via blockchain, and these are not replaceable non-fungible tokens. Here typically means cannot trade with regular currencies, and the trade is only possible through blockchain because blockchain is a system that tracks the object’s authenticity.
This verifying process is done by a group called miners. They use their algorithms and machines to verify. This authenticating process is called PROOF OF WORK. After they validate, they get a crypto token and add the work to the blockchain. The adding process is called mining. When the mining is done, every block of the chain gets updated. Now we can say that goods that we trade thru blockchain are cryptocurrency to cryptocurrency. Still, if it’s not currency besides, it’s a non-fungible token which we can be traded with cryptocurrency, like basically with Ethereum, are NFTs, or it stands for non-fungible tokens.
In NFTs, N stands for non or which it cannot be, F stands for fungible or replicable, and T for token and which can be directly exchangeable with ETH, and the owner of the NFTs can be switchable. Before understanding the NFT, we have to know or understand what blockchain is.
So, what is this blockchain? Blockchain is a data collection and distribution system or distributed ledger. Still, unlike banks, blockchain shares all the information or transaction data with all the blocks in the chain, which is decentralized. If we send money thru a bank to one another, no matter how we think, the only authorities here are the banks. Because of their reason, the operation can be on hold, but we still do this because they are the foremost experts, and we trust them. Again we have a driving license or certificate of something important. Here the power is held by the government or some organization that validates it. We overheard in many news, more or less data is getting corrupted because of some person or a small group, and the supremacy who holds to change these is central. In blockchain, the data is shared with the whole group. Manipulating the records behind the eyes is entirely impossible. It is timestamps of digital information, so therefore no one can rewrite or overwrite the information it contains.
Just like it sounds, block-chain! It is a chain of blocks or the blocks of a distributed ledger. It works as a peer network. This system is also secure because of its cryptography; it allows all the messages to communicate firmly. It also follows a unique algorithm for each data verifies from its previous blocks and following blocks if the information is legit. It can only pass if the date is correct. On the other hand, if we make a trade by blockchain, all the blockchain holders or unabridged group checks the information to see if it is accurate. If it is not, then the trade won’t be happening. Mostly it was used for bitcoin at first. Now it is used for almost every cryptocurrency like Ethereum. So let’s follow what NFTs are and how they work again.
Reports of NFTs or non-fungible tokens are shattering the internet. At present, it is in one of the peak trends. It is an excellent opportunity for digital artists. Digital art NFTs are more than gold. Sold over million and million dollars, like Beeple sold his art collage worth over $69millon in the year 2021 March, and this is the highest peak price ever paid for an NFTs till now. This is not just an NFT. This is a combination of his magnificent arts, a combination of skills from 2007 to 2021, which he sent 13 years to work on. It is called “The First 5000 Days”. Mike Winkelmann, or we call Bleelp still working on doing new projects on software like Cinema 4D and others. If we calculate how much each photo is worth, we will find it’s over $13k for each, and that’s amazing.
There are also some NFTs that make no sense to some of us but are made for others. Just like one of the fathers of Twitter, Jack Dorsey sold his tweet for around $3million. The tweet sold over this high amount of money because it was the first tweet ever.
Again one of the great examples could be the famous Nyan Cat, a GIF kind of cat, part Pop-Tart. In 2021 this flying rainbow cat was a viral meme. In 2021, the earliest GIF sold for 300ETH or Ether, the cryptocurrency Etherium network powered by, which is estimated to be equivalent to close to $600,000. After knowing all of these transactions, we get one thing, like other cryptocurrencies like bitcoins, Ethereum, Dogecoin, and more so, its value is not equal to any other NFTs. One is valued entirely differently from one another. On the other hand, we know one Ethereum is = one Ethereum, and just like this, one bitcoin equals one bitcoin. This also makes us understand that every NFT are unique, just like it sounds non-fungible. These are a really unique set of tokens that contain various kinds of data utterly different from one another. So to easily verify these, we use blockchains, which can check the legitimacy from the beginning of the token.
So as we know, NFTs holds a unique token, which is part of the Ethereum blockchain. These tokens are different from each other and have spare data. The paramount importance is part is the information it carries, which gives them a new form like music, GIF, art, or videos in different formats like JPEG, video, or any other music format like m3 and more. These NFTs can be sold or bought by the people just like any other pawn item in the store, but the market sets an excellent price because of their rarity and demands.
We can also copy an NFT picture, art, or video from the internet. Still, the transferred item won’t have the same value as the NFT, just like if you buy the first superman suit that was used in a movie from a legal pawnshop or auctions and a super outfit from a Halloween store or made by are not the same, because they are not the same. The experts verify the auction outfit, and just like NFTs have Ethereum blockchain code, its legitimacy is confirmed by blockchain. We can also buy an NFT and sell a whole or part of it as a percentage, and whoever purchased the amount also can resale it, but the price on it won’t be the same as the original or as real art.
Now the query is, what NFTs should I purchase. In response to that, it’s totally up to you. Fundamentally NFTs are exclusive collectibles, and each one of these has a unique token.
Experts suggest that the NFT you are buying should have some fundamental aspects or at least one. The NFT you are purchasing should be famous, for it belongs to a well-known person. Like the film of an outrageous slam dunk of LeBron James, the video sold as an NFT as an exchangeable digital card for $208000 or ETH. So why does this value so much? Because it’s an authenticated clip of the celebrity basketball player LeBron James.
Let’s get to the second aspect! It has to be the first of its kind or first of its NFT, or can anything be recorded at the beginning of its history. The example, just as we mentioned earlier, is Jack Dorsey’s tweet. Again, it is worth this enormous amount of money because it was the exact first tweet ever being publicly shared on Twitter. Another example could be Cryptokiitties because these are the one that was historically at the beginning of NFTs.
One other aspect should be scarcity. Like rarer your NFT is, the demand will get more in the future. NFT or art collectors are always in search of rare NFTs. An example could be a glossy first edition of Pokémon cards. Just think about the first edition Charizard card. It was mind-boggling!
Also, people like to invest in NFTs, which have real-world meaning. Let’s say NFTs of some very well-known YouTube celebrity. By buying NFTs from them, they offer to make a video with you on/or her YouTube, and that could be something brilliant.
Now how do we buy one of these?
To buy NFTs, we have to enter the Ethereum blockchain by purchasing Ethereum. Before that, if you don’t have a wallet for Ethereum, make it. Then choose a preferable website because purchasing can become possible from many websites. These websites accept ETH tokens because the system is built on Ethereum constructed tokens. So, after creating an account, you are ready to go. The most common way the marketplace sells these NFTs is at auction. You have made the perfect bid for your NFT. Nearly some NFT gets a price increase every few days or months. The price can increase double or triple or many times than you currently see. Here making a precise decision can make a positive future.
What if I want to make or sell my NFTs?
If you want to make an NFT, it has to be original work, like it could be art, music, video, or many more. Just as we mentioned previously, you have to have an Ethereum wallet for exchange. Then go to websites like Rarible.com, or you may find many more, but Rarible is one of the first marketplaces for NFTs. Then create an account with your wallet, link your blockchain, and you are set to upload. Create collectible single or multiple, depending on what you have, then export preview work. Afterward, add some information about your image or video, like when it was created, the name of the image or clip, the artist’s name, etc. Then allow the content to be fully unlocked when it is purchased. Then add like of the actual product, and the product must be somewhere highly secure, like IPFS.
This virtual container has specific security and allows users to connect with their p2p network. This IPFS assigns the content with a unique hash. If the content changes, so will the hash. After doing this, a link will be created in the stored website. Just copy and paste in the space of Rarible where it says unlock, then add price. When it is complete, you can indicate collection as ERC-721 token or as Rarible. It’s up to you. Then again, add all the information it asks for and add special fees if anyone wants to resell the item. In this way, you will get a percentage amount of the resoled value every time anyone sells your NFT. Remarkable!!! Then select create an item, and it will start to process. This will ask for a token for blockchain, where you have to pay from your wallet for the gas fees of the minors. Subsequently, your token will be created and added to the blockchain. You are good to go because it has been open for the offers. Great job! If anyone buys it, you will be getting ETH as your payment.
The entire process of NFTs might sound a bit complex, but this is an excellent opportunity for digital artiest, content makers, or whoever comprehends the market best. In this manner, they get the most out of their effort.