With cryptocurrency and Blockchain increasingly finding their way into the news recently, many people find themselves drawn further into the digital world and its offerings. While it is attractive for the potential for profit it provides, for the inexperienced it can be a daunting task to wrap your head around all the jargon.
What are NFTs?
One popular question that seems to have been popping up in search engines is “What are NFTs?”. The three-letter acronym is increasingly becoming a hot topic in many places all over the world. A lack of knowledge on it might make it seem insane that people worldwide are paying thousands and sometimes millions of dollars for what seems to be useless internet art.
To fully understand NFTs, one must first have reasonable knowledge of the blockchain. The simplest way to explain it is that it is a publicly distributed ledger – a public record of cryptocurrency transactions available to be seen by everyone with access to the internet.
Enter non-fungible tokens, where ‘fungible’ is a synonym of ‘replaceable’. NFTs are non-replaceable tokens built on blockchain technology. While art is the most popular form they take, NFTs could be a wide range of things, anything from music to art and even real estate.
Why Invest In NFTs?
Some speculate that NFTs are in a bubble that sooner or later will burst. Many usually ask what inherent value is there in a digital picture of art, when you could download and view a jpeg on your computer for free?
While that may seem a legitimate criticism, a parallel with real-life artwork could be made. Why pay for the Mona Lisa when I could just as easily purchase a print of it for millions of dollars less? The answer is uniqueness. While there are thousands of duplicates of the Mona Lisa, there is only one original.
This originality is what people look for with NFTs and what better way to verify that originality than with the Blockchain which was made to be unchangeable and publicly accessible. NFTs really came into the public eye when Twitter CEO Jack Dorsey sold his first-ever tweet for over $2 million. Since then the NFT craze has multiplied bringing in a host of big players to its sphere.
Notable names such as Dolce & Gabbana, Fortune, and some A-list celebrities are trading NFTs. The fashion brand, Dolce & Gabbana recently launched their ‘Collezione Genesi’ NFT fashion line, making a big splash in crypto and fashion circles alike. Fortune magazine similarly made millions of dollars in NFT sales last month.
Apart from big names in the NFT space, regular people are also managing to make millions from the craze. Two popular examples are the penguin and rock NFTs. EtherRock NFTs are set of 100 collectibles with no purpose other than to be bought and sold. As one of the first NFT collections ever minted, they usually cost thousands of dollars. The pudgy penguins are similarly a collection of 8,888 penguins currently selling for a profit.
How To Buy NFTs
Primarily NFTs are on the Ethereum blockchain and although some other Blockchains support them, Ethereum is your surest bet. Depending on what you hope to acquire, many vendors work on the Ethereum network with the most popular of them being OpenSea, Rarible, and Mintable.
The focus here will be on OpenSea. OpenSea is very popular for a multitude of features including its ‘price floor’ which specifies the minimum price that the NFT can be sold for.
Even though explaining the inner working of blockchain and NFTs seems complicated at first, actually acquiring NFTs is a relatively painful process and can be learned in a handful of steps:
- Create a cryptocurrency wallet on MetaMask. Download the Metamask extension for Google Chrome
- Fund your wallet. You can do this directly from Wyre on Metamask. You will need a reasonable amount of ETH, to cover the cost of the NFT and its gas fee
- Go to opensea.io and check the marketplace. Here, you can find thousands of NFTs. Filter the results according to the categories you’re interested in
- Choose an NFT to buy, select it and take note of its ETH and USD price then click buy now. Sign in to the Metamask wallet you created earlier and proceed to the ‘complete checkout’ option
- Pay the gas fee associated with Ethereum transactions – this should be under $30 although can be high during periods of high congestion
- Confirm the transaction and you’ll be taken to a screen telling you that your transaction has started. Transactions can sometimes take a while – you can track a transaction’s progress on Etherscan
- When your transaction goes through, you now officially own your first NFT. You can view it in ‘my collections’ on your NFT profile page
Are NFTs Just A Fad?
Many people believe that the NFT craze will eventually die down citing the fact that these tokens have no inherent value and will eventually decrease in price. Whether or not this will turn out to be true remains to be seen but the furore surrounding NFTs is not so strange when compared to past events.
The Dot-com bubble is an example of a similar situation. The internet brought with it widespread excitement and internet-based companies saw meteoric growth leading to rising stock prices in the late ’90s.
After its peak passed though, many companies saw stock prices plummet. Although this might look bad at first glance, the internet boom eventually found a stable equilibrium, and today many million-dollar companies are internet-based.
NFTs will eventually find their own equilibrium and separate from the multitude of penguin and rock NFTs currently making waves, many companies are already taking advantage of it.
Real estate tokenization is slowly solidifying itself in the industry with many companies linking real-world sales with blockchain tokens. The Axie Infinity game is also having real-world effects especially in poorer economies and lifting many people out of poverty amidst a global pandemic.
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