13 Sep
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Introduction
An NFT is a token (a digital asset) that exist on blockchain. It can include a picture, drawing, photos, in game items, tweets. An NFT can be traded online using cryptocurrencies. NFT is different from other digital forms as it is backed by blockchain.
NFTs are becoming very popular as they are becoming an increasingly popular way to showcase and sell your digital artwork. Some early NFTs were Terra Nulius, Curio cards, Cryptopunks, Cryptocats etc., before NFTs slowly moved into public awareness in early 2021.
How do NFTs work?
NFT work on blockchain as it gives users complete ownership of a digital asset. For instance, if you’re a sketch artist, and if you convert your digital asset to an NFT, what you get is proof of ownership powered by Blockchain.
Why are people spending millions on something they could easily screenshot or download?
- Exclusive rights (especially on Metaverse)
- Scale
- The sale of NFTs surged $25 billion in 2021 as the popularity of NFT (a crypto asset) increased.
Difference between NFT and Crypto Currencies:
- They are altogether different things, though they are both built on blockchain.
- Cryptocurrency is a currency and is fungible, meaning that it is interchangeable. (For instance, if you hold one crypto token, say one bitcoin, the next bitcoin that you would hold will also be of the same value) But NFTs are non-fungible, that means that the value of NFTs is not equal to another. Every art is different from another making it non fungible and unique.
Risks associated with buying NFTs:
- Several NFT Scams have been reported: emergence of fake marketplaces, unverified sellers often impersonating real artists and selling copies of their artwork for half price
- Negative environmental Impact: Blockchain validation needs to run on several high-powered computers creating a very large carbon footprint.