NFTs or Non-fungible tokens are digital assets that represent real-world objects (like art, music, in-game items, or videos), but a lot of the current excitement is mostly around using the tech to sell art.
How are NFTs created?
NFTs are created by artists or license-holders through a process which is known as minting. This process involves signing a blockchain transaction that outlines the details of the token, and then it gets put on the blockchain to trigger a smart contract function that can prove its owner. I know you’re probably wondering what “blockchain” even means. Well, blockchains are distributed databases that are shared among computer networks.
Basically, they store information electronically in digital format and are best known for their crucial role in cryptocurrency systems, such as Bitcoin.
NFT Marketplaces and Ownership
Several marketplaces have popped up around NFTs, which allow people to buy and sell. These include OpenSea, Rarible, Binance, Nifty Gateway, and many others. At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency like Bitcoin and Litecoin, but its blockchain supports these NFTs, which stores extra information that makes them work differently. It’s worth noting that other blockchains can implement their own version of NFTs.
But NFTs are designed to give you something that can’t be copied. Ownership of the work through the artist can still retain the copyright and reproduction rights, just like with physical artwork. To put it in terms of physical art collecting, anyone can buy a Picasso print. But only one person can own the original.
Can NFTs be stored?
The most common mistake a lot of people make when it comes to NFTs is to consider them just a bunch of cryptocurrencies bundled together, which would naturally make it viable on all crypto wallets. However, it is a bit more complicated than that, which is why you should look if your crypto wallet supports the storage of NFTs in their NFT form. In some cases, you might lose the NFT forever if you attempt to transfer it to a wallet that does not support it.
Anyone at all can invest in NFTs, which is an added advantage. Asset ownership that is tokenized into an NFT can more easily and efficiently be transferred among people anywhere in the world.