What are nfts?| What It Means and How It Works

 

WHAT ARE NFTS?

NFTs, an English acronym for non-fungible tokens are special digital certificates aimed at establishing ownership of a digital asset. 

Put simply, NFTs are a way to make a file unique. This means that every single NFT is exclusive and not interchangeable with other NFTs of the same type. 

Unlike Bitcoins, NFTs are therefore not equivalent to each other but have a different value based on their unique characteristics.

WHAT ARE NFTS FOR?

Let's say

 I do a computer drawing. If I decide to give a copy to you, that file with the design then then we will both have it. In other words, it's not like buying a physical painting that is exclusively mine and therefore only I own it. In fact, if it were a physical object - like the picture of the Mona Lisa - and I decide to give it to you, then I'll be left without it. So, as already said, NFTs are used to make a file unique. 

But why do you need to make a file unique?

 Simply because the value of many things is due to their scarcity. Just think, for example, of diamonds: the fewer there are around, the higher their value. Files, on the other hand, can be copied and therefore the same file can be shared with millions of people who will therefore all have the same file. Returning to the subject of the physical object,

Here, then, is what NFTs are for: they allow you to know what the original file of a certain thing is. There are artists who have therefore decided to create works certified by NFTs. The artist Beeple created the digital artwork called “Everydays: the First 5000 Days” which was bought for over 69 million dollars. 

In this way, whoever bought it is sure to have the original file and not one of the many possible files. Among the most famous Italian artists is Marco Lodola who created an NFT that brings the Beatles back to the Abbey Road crosswalk.

 Morgan was also the first of the famous musicians to release his own song as NFT called "Premessa della Premessa".

Digital art isn't the only thing being sold through NFTs though. There are those who have started selling rare posts on social networks. 

But why make a post on a social network unique? 

Because in this way that post acquires value. For example, Jack Dorsey, the creator of Twitter, sold the first tweet in the world - which he published - for about 2.5 million dollars. They are unique things, that is, a way to digitally make something unique that can become a collector's item, just like a physical object that acquires value over time.

Similarly as with Bitcoins, however, it is not certain that NFTs will grow in value. Indeed, they could even go down and therefore, like any property of this type, it could also be a risky investment. Of course, it is possible that the NFT market will grow exponentially in the coming years, but it may also be that it could fall into oblivion, perhaps along with other cryptocurrencies. 

So you have to pay attention to all those people who take advantage of these fads (there are people who are starting to sell their NFTs on the wave of the popularity that they are having but, obviously, several NFTs will not have any value).

HOW NFTS WORK

NFTs work by means of blockchains , that is, they are linked to the blockchain that you choose and, if desired, they can be exchanged between users through specific platforms (such as, for example, OpenSea ) where it is possible to buy and sell NFTs safely and reliable.

HOW TO CREATE NFT

The process of creating an NFT is not complicated but requires time and effort, as well as any costs to be incurred. To be able to create NFT you must first have a digital wallet (also called electronic wallet or e-wallet) in order to manage the NFT and the earnings generated by its sale or exchange (in real money or in cryptocurrencies). 

Then you must also know that any type of digital asset can become an NFT: 

• a photo, 
• a video, 
• a song, 
• a PDF file, 
• an emoticon,
• a patent, 

and so on.

In any case, the steps to create an NFT are basically three:

1. the actual creation of the NFT, i.e. choosing which type of digital resource you want to transform into an NFT;
2. the transformation of the file into NFT, ie its minting;
3. the sale of the NFT.

The Ethereum platform was the first to introduce NFTs but others such as Cardano and Binance are also available today.

HOW TO INVEST IN NFT

Investing in NFTs is a bit different than investing in cryptocurrencies such as Bitcoin or Ether. Since NFTs represent digital assets, the best way to invest in them is to look for projects that are considered interesting and then monitor their development over time.

Furthermore, it is important to remember that investing in NFT also carries the risk of losing all of your money. Therefore, before making any decisions, make sure you do your research and invest only the amount you are willing to lose.

EXAMPLES OF NFT

There are various types of NFTs. Some examples of famous NFTs are CryptoKitties and Decentraland:

👉CryptoKitties is a game where you can catch, breed and sell rare digital cats;

👉Decentraland is instead a virtual world in which users can buy, sell and exchange virtual properties.

Another example of NFT is Axie Infinity, a game where they breed, collect and train creatures called "Axie". Artist Cory Ondrejka, former creative director of Linden Lab (the software house that developed Second Life), created the virtual world Another World where participants have the opportunity to explore or build within a shared environment.

Finally, it is also worth mentioning The Sandbox, a virtual world in which users can create games and applications, giving developers the opportunity to monetize their creations thanks to NFT technology.

These are just a few examples of what is possible with NFTs. In fact, NFTs can be used to represent anything from works of art to music videos to software licenses and social network accounts . In practice, NFTs can be used to track ownership of any digital asset.

CONCLUSIONS

NFTs have revolutionized the way people can acquire, trade and trade in digital assets. Before the introduction of NFTs, digital assets were in fact easily duplicated and therefore inexpensive. Now, with NFTs, every single digital asset can be verified as unique and authentic, thus making it much more valuable. At this point, therefore, you should have finally understood what NFTs are .