How does NFT work and why is it becoming popular?
Have you ever thought of making your digital content/product authentic? Something like that adds to your credibility and you own it. That’s what NFT is all about. In short, NFT means non-fungible tokens (NFTs), which are generally created using the same type of programming used for cryptocurrencies. These cryptographic assets are based on blockchain technology.
The term NFT clearly says that it can neither be replaced nor interchanged as it has unique properties. Cryptopunks is a notable example of an NFT. It enables you to buy, sell and store 10,000 collectables with proof of ownership. Sounds cool enough?
Unique features of NFT
- Digital Asset – NFT is a digital asset that represents Internet collectables like art, music, and games with an authentic certificate created by blockchain technology that underlies Cryptocurrency.
- Unique – It cannot be forged or otherwise manipulated.
- Exchange – NFT exchanges take place with cryptocurrencies such as Bitcoin on specialist sites.
How does NFT work
The majority of NFTs reside on the Ethereum cryptocurrency’s blockchain, a distributed public ledger that records transactions. NFTs are individual tokens with valuable information stored in them. They can be bought and sold just like any other physical type of art as they hold a value set by market and demand. NFT’s unique data makes it easier to verify and validate their ownership and the transfer of tokens between the owners.
Some examples of NFTs are:
- Games
- Domain names
- Digital collectable
- Essays
- Sneakers in the fashion line
Why is NFT popular
NFTs have been around since 2015 but due to the normalization and excitement of cryptocurrency, NFTs have started gaining popularity now. Consumers have the opportunity to own unique digital content and potentially hold them as a type of investment.
When someone buys a non-fungible token, they gain ownership of the content, but it can still make its way over the Internet. In this way, an NFT can gain popularity — the more it’s seen online, the more value it develops. When the asset is sold, the original creator gets a 10 per cent cut, with the platform getting a small percentage and the current owner getting the rest of that revenue. Thus, there is potential for ongoing revenue from popular digital assets as they are bought and sold over time.
Experts suggest that NFTs can be a good investment because you can resell them for profit. Several NFT marketplaces allow sellers to get royalties for their sold assets. However, proper research is necessary before investing so that you can gauge whether it suits your demands.
