NFTs are typically held on the Ethereum blockchain and are very different from Cryptocurrency
NFTs are taking over digital markets for the last couple of years. Be it music, art, videos, or tweet they are selling like there is no tomorrow with the value of millions of dollars. From the year 2021, NFT’s sales have hyped to USD 25 billion because of the raised interest of celebrities and tech enthusiasts.
But currently this year NFTs are hyping and are becoming so big on digital platforms. Let’s find out the reason.
First, let us understand what are NFT and how we can use it
NFTs are non-fungible tokens that can be converted into a digital form and can be traded online. Some examples of NFTs are art, drawing, photos, videos, GIFs, music, in-game items, selfies, and even a tweet. NFTs are unique and can’t be replaced with something else. They are bought and sold online, along with a cryptocurrency, and are generally encoded with the same underlying software as many cryptos.
NFTs usually exist on a blockchain and are distributed like a public ledger that records transactions. These NFTs are typically held on the Ethereum blockchain. A blockchain is a distributed ledger where all transactions are recorded. It is like your bank passbook, where all your transactions are transparent and can be seen by anyone, and cannot be changed or modified once recorded.
NFTs are like physical collector’s items, on the digital platform. The owners of NFTs have exclusive ownership rights for the original asset. This means that NFTs can have only one owner at a time. NFTs’ different and unique information makes it easy to verify their ownership and transfer tokens between owners. The original creator or the person who owns the art can also store specific information inside them. For example, artists can sign their artwork by including their signature in an NFT’s metadata.
NFTs provide artists and content creators with a unique opportunity to convert money for their art. An artist publishing work on a social network makes money for the platform and sells ads to the artist’s followers. They get exposure in return, but exposure doesn’t pay the bills. But when they sell their art or content as an NFT, funds go directly to them. If the new owner then sells the NFT, the original creator can even automatically receive royalties. And each time that NFT is sold the creator gets funds as the creator’s address is part of the token’s metadata – metadata that can’t be modified.
NFTs can provide records of ownership for in-game items, fuel in-game economies, and bring a host of benefits to the players. In a lot of regular games, you can buy items for you to use in your game. But if that item was an NFT you could recoup your money by selling it when you’re done with the game.
What is the difference between NFT and Cryptocurrency?
NFCs are non-fungible token and it is usually built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but the difference is that at a very high-level NFTs are part of the Ethereum blockchain.
Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs that store extra information that makes them work differently.
Cryptocurrencies are “fungible”, which they can be traded or exchanged for one another and are also equal in value. For eg., one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Because Cryptos are fungible they are a trusted means of transaction.
NFTs are different as each of the non-fungible tokens consists of a unique signature that makes it impossible to be exchanged for or equal to one another. Every art is different from others, making it non-fungible, and unique.
Why there is a Rise in NFTs
NFT came into existence on 3rd May 2014, but has been gaining some popularity since 2017, when approximately USD 174 million were invested in them. The very first NFT was Terra Nulius on the Ethereum blockchain, although this project was merely an idea. Then came Curio Cards, CryptoPunks, and CryptoCats in 2017, before NFTs slowly moved into public awareness, then expanding into mainstream adoption in early 2021.