What is NFT: Everything you should know

Introduction

NFT is a form of digital token that represents something unique. Non-fungible tokens are the opposite of fungible tokens (or “fungs”), which represent interchangeable units of value, like cryptocurrencies. Think of NFT as baseball trading cards instead of dollar bills. One might argue that you can’t swap your left arm for another person’s, or that one person’s trading card is more valuable than someone else’s. This is the core idea behind non-fungibility; each token has different properties and attributes attached to it, making them unique. The hope with this technology is that users will be able to prove ownership over these individualized digital assets in order to establish decentralized marketplaces where they can trade them freely without having to worry about a centralized party. Think of a group of famous painters all agreeing to sell their paintings on a single marketplace, but each painting is unique and can be verified as being owned by the corresponding artist via the blockchain.

How do you make NFT?

 

NFT

Non-fungible tokens are created from two basic components: owning an existing token that you want to create a derivative version of (which will act as your initial “base asset” or token), and then creating new metadata for this base asset that builds upon it in some way. The rules that govern how this metadata affects the behavior of your token need to be established in advance — what does it mean when token A has feature X vs. when token B has feature X? How does this standardized metadata for token A impact the way it can be used, traded, or sold on a marketplace? Since these new rules need to be known in advance, they are written as computer code (via smart contracts) that is stored on the blockchain – that’s how non-fungible tokens work.

How do you buy NFT?

The most popular way to purchase NFTs is with ether (ETH), which has already been exchanged for cryptocurrencies like Bitcoin and Litecoin. ETH is accepted by many exchanges because of its widespread adoption amongst traders. Another method is to use custom cryptocurrencies built specifically for developers looking to build an application around NFTs — one example would be the CryptoPunks standard, which is an ERC-721  token.

How do you store NFT?

Since NFTs are software tokens that live on the blockchain, they can be stored in any cryptocurrency wallet; we recommend using a hardware wallet like Trezor or Ledger. KeepKey and Nano S both offer dedicated NFT wallets for storing your crypto collectibles and other custom digital assets. The primary thing you’ll need to decide when choosing a storage solution is what kind of NFT (ERC-20 vs ERC-721) your particular tokens will support — if you have more than one type of token, it’s easiest just to use multiple wallets. Some wallets also support cross-chain interoperability between various cryptocurrencies – if you’re unsure about what this means, check with the wallet’s support team!

Where can I buy NFT?

The most popular marketplace is  OpenSea, which has a great interface and offers a variety of different types of tokens to be purchased. Beyond that, there are dozens of smaller marketplaces out there where you can purchase NFTs from developers or users looking to sell their tokenized assets – for this reason we recommend only using established marketplaces with good reputations. There are many sites claiming to offer non-fungible tokens for sale, but do your own research on the quality and legitimacy of these places before putting in any money. In general, it’s best not to put large amounts of money into digital assets without doing additional research.

Some people claim NFT is a scam, what do I make of that?

NFTs are a new technology, and as such require some explanation to understand them fully — this does not necessarily mean that they’re scams. A general rule when considering any investment is to watch for red flags: confusing terminology, grandiose promises of unrealized technology with no current applications, outlandish claims about the token’s use case without any sort of practical use in sight… you get the idea. If something appears to be “too good to be true,” it most likely is! With non-fungible tokens especially we recommend caution – there is still much potential unexplored within this market, and it can be easy for some to take advantage of that excitement.

What is NFT worth?

The value of any given NFT is difficult to determine, particularly in the early stages after launch, when there are still many unknown variables in play — what features will the token have? How popular will it be once released? Will its use cases expand or contract over time with usage? Questions like these are impossible to predict at this point in the development cycle – all you can really say for certain is whether you think an individual token has potential.

Is it possible to make a lot of money in this niche?

Non-fungible tokens are hot today, but that doesn’t mean there’s a guaranteed financial windfall for anyone who gets involved with them – it’s still very early days for this market and many non-fungible token developers will fail before they succeed. There is no can’t miss formula here: build an application and wait until people start using it (or don’t). As long as you take the time to do research, stay wary of hype , and put only small amounts of money into your investments, you’re less likely to lose much if things go south.

How do I trade NFT?

There are two primary ways to buy and sell NFTs: peer-to-peer (P2P) or centralized exchanges. P2P is similar to what you’d find with any other cryptocurrency – the individual seller sets the price at which they’re willing to part with their token, and you can either accept that asking price or walk away. Centralized exchanges, on the other hand, allow users to trade tokens in bulk through a common interface — but this comes at a cost. To date, there are only two reputable centralized non-fungible token exchanges: OpenSea , which supports ERC-721 standard tokens; and Rare Bits . These marketplaces make money off of either a percentage of each transaction or by charging a premium on the tokens sold within them, and as such it’s important to do your research before starting to trade.

 

What can I do with NFT?

The applications for non-fungible tokens are still being developed — right now there aren’t many practical uses beyond collecting and selling . However, this is likely to change soon as people begin creating tools that take advantage of the technology’s unique features. There are already several games in development built around ERC-721 standards, including CryptoKitties ; Etherbots , which lets players build robots using hardcoded parts; and CryptoCities , which takes place in a digital urban environment. The future possibilities for how we integrate non-fungible tokens into our lives are limitless.

How do developers make money off of NFT?

NFT creators can make a profit in several ways: facilitating transactions , selling and licensing their own creations, and charging users to access content (i.e., the same way that streaming services like Spotify work). Because there’s no guarantee of success when creating an NFT these avenues aren’t necessarily foolproof, however. It’s important to remember that just because you made something valuable doesn’t mean that others will see it as such — or even use it at all! If you’re going to build something with the intention of making money, be realistic about your chances for success and plan accordingly.

Note: This image is used for education purpose only

 

conclusion

The uses for non-fungible tokens are still being explored, so it’s incredibly hard to predict where the market is going.

1) They’re bound to become more popular as time goes on. There’s no denying that collectibles like CryptoKitties draw eyeballs, which means they’ll continue to grab headlines even if they don’t make money for their developers or users (which is unlikely).

2) The market has seen its ups and downs already. As I pointed out above, there was a huge correction in the NFT space in late 2018, which was followed up by a wave of companies shutting down due to their lack of sustainable business models.

3) It’s likely that the ERC-721 standard will continue to rise above its alternatives because it has features that developers would find useful. However, this doesn’t mean that it’ll be the *only* standard — there are many competing non-fungible token standards out there right now, including ERC-1155 , which is being used for games like CryptoWarfare . Each developer should make their own decision about what makes sense for them and their project – there isn’t one standard “best” way to do things!

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