NFTs - 101 Guide

In this guide you will learn why we believe that NFTs are becoming more and more important and how NFTs could be used in the future.

First of All... What does Fungible and Non-FungibIe mean?

Fungible

If an item is fungible, it can be replaced or exchanged for any similar item. Fiat currencies, such as the U.S. dollar, contain fungible units. This is because a one-dollar bill can be exchanged for any other dollar bill. Similarly, cryptocurrencies such as Bitcoin, Ethereum, and MANA are also fungible, as one token can be exchanged for any other token of the same currency. The only thing that changes is an entry in the blockchain that registers the transaction.

Fungible means:

Interchangeable
Uniform
Divisible

Non-Fungible

A non-fungible asset has the opposite characteristics to this definition: it is unique and not exchangeable. A physical example of a non-fungible asset might be an airline ticket. They may look the same as other tickets, but each has different passenger names, destinations, departure times, and seat numbers. In other words, each ticket is special.

Non-Fungible means

Not Interchangeable
Unique
Non-Divisible

The Basics

Now that you understand the concept of fungibility, let's move on!

The recent emergence of non-fungible tokens has left many confused as to what these tokens are and what they do.

Any currency, whether cryptocurrency or fiat currency, must be fungible if it wants to be considered and used as a medium of exchange or store of value. In the case of cryptocurrencies, fungibility may be even more important, as it allows them to maintain the legitimacy of interchangeability between different entities.

NFTs are unique representations of goods or assets that take the form of digital tokens. Through the use of cryptography, NFTs can prove authenticity as well as ownership of such assets and goods.

What can we do with NFTs?

Collectibles

NFTs are best known for their utility as collectibles, where users can assign digital assets to their names and ownership is immutable.
www.CryptoKitties.co

Play

NFTs give players real ownership of in-game items. Players can monetize their efforts by actually owning (and even selling) the rare items they earn in games.
www.GodsUnchained.com

Tickets

Tokenizing event tickets prevent fraud (including counterfeit tickets) and open up new, decentralized markets for trading and resale.
www.OpenSea.io/cryptotickets

Licensing

The creation of NFT-based licenses can curb software piracy and even allow licenses to be sold when they are no longer needed. Here, the license acts as an asset.

Identity and certificates

Birth certificates, passports, driver's licenses, contracts or even patents can be tokenized with NFTs and used for identity authentication and certification.

Charity and donation

NFTs can offer entrepreneurs new ways to raise funds and connect with their stakeholders. They can also ensure the security of remittances and help nonprofits manage their funds.

Owning NFTs

Currently, NFTs exist as digital tokens that represent ownership of objects such as art, music, in-game items, and videos. Although almost everyone has heard of NFTs and associates the term with images of digitally generated art, NFTs come in several forms. First, NFTs can be tokenized video clips that are available for purchase on various NFT marketplaces. Though not always, the purchase may grant the owner(s) the right to distribute in addition to owning the underlying token associated with the video clip. In February, a 10-second video clip titled "Crossroads" by artist Beeple sold for over $6 million on the Nifty Gateway platform.

https://niftygateway.com/marke...

While many have heard of NFTs and seem to know a thing or two about them, there is still confusion about how to make a purchase or where to start. In addition to attending NFT coin mints or selling an NFT collection to the public, others may turn to secondary marketplaces where NFTs are traded in auctions. Because high-value NFT collections sell out almost as soon as they become available for minting, many turn to secondary marketplaces to purchase these NFTs. Some prefer to browse NFT marketplaces to search specifically for their favourite NFTs rather than commit to a first mintage.

When buying through an NFT marketplace, potential buyers can also view statistics that give them a better sense of how popular the collection is and whether it has increased or decreased in value over time. For example, on NFT marketplaces such as OpenSea or rarity.tools, users can track statistics such as lowest price, price change within 24 hours, price change within 7 days, number of owners, number of items, and trading volume. Those who explore the world of NFTs by browsing a catalogue on the secondary market will either come across NFTs that are part of a much larger collection or ecosystem, or a unique 1-of-1 piece.

Making your first purchase

If you wish to participate in the first public sale of an NFT collection, you will likely need to mint the NFT through the collection's website. The best way to find out how, where, and when to mint your coins is to visit the collection's website and/or one of their social media/messaging platforms (Twitter, Telegram, Discord, etc.) to learn more.

On the other hand, if you have already found an NFT on a secondary marketplace that has caught your interest, you will need to make the purchase on the website of the marketplace where it is listed. Regardless, you will need to load a digital wallet with the cryptocurrency that is native to the blockchain on which the NFT exists, be it ETH, SOL, or KSM.

Users looking to buy Ethereum-based NFTs can use a number of different wallets to make their purchase, with MetaMask being the most popular among users. For Solana-based NFTs, purchases can usually be made using a phantom wallet. For Kusama and Polkadot-based NFTs, a Polkadot.js wallet can be used. As with any other type of digital wallet, users should do their own research to determine which wallet is best for them, follow best security practices, and be wary of scammers.

Interacting With Your NFT

After an NFT has been purchased and paid for, the token will appear in the same wallet that was used to purchase the NFT. Depending on the rights associated with the purchase, there are a number of ways to interact with the NFT, aside from keeping it in your wallet or relisting it. If the NFT in question represents ownership of a digital image, video, or audio file, its owner may have distribution rights and be able to use the corresponding image, video, or audio file for commercial purposes. However, since most NFTs do not include distribution rights, they can come to life in the physical world. Some may choose to print their NFT on a billboard, clothing, or other physical items. In addition, digital picture frames can also be purchased in which NFTs can be displayed, just as a regular picture frame would display traditional artwork.

NFTs can also be experienced in the metaverse, which is an immersive digital environment where people interact as avatars. If the purchased NFT is part of a video game or dedicated web application, it can be used within that ecosystem. However, in most cases, NFTs in the form of images or videos are shared on social media platforms and used as profile pictures and avatars. For example, in August 2021, NBA superstar Stephen Curry purchased a Bored Ape Yacht Club NFT and promptly posted it as his profile picture on Twitter.

Conclusion

Society is moving toward a digital world where expressions, creativity, moments, and entertainment are digitized and stored on blockchain platforms. While NFTs were initially a niche sector, their development has attracted attention and introduced many new people to the world of blockchain and cryptocurrencies. We've seen impressive growth in recent years, especially in 2021, and it seems we've only scratched the surface. In the current ecosystem, NFTs and the storage of their metadata can be fraught with risks that affect their sustainability, but we believe that as awareness grows, NFTs will successfully expand beyond art, sports, music, and collectibles. They will change the way artists offer their goods and services, or simply the way people interact with others on the Internet. As the younger and more tech-savvy generation moves their offline activities online, we believe NFTs will change the way we experience trends, culture, and interactions in our daily lives.

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Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE.
Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

Categories: Exclusive, Guide