What are NFTs?

Photo by Mick Haupt on Unsplash

Thanks to the way they revolutionized the space for gaming and collectibles, NFTs have become widely popular with crypto users and businesses alike. There has been over $100 million invested on NFTs since November 2017.

What are NFTs?

Non-fungible tokens (NFT) are digital assets that vary from collectible sports cards to virtual real estate to a broad spectrum of exclusive tangible and intangible products.

NFTs are Distinctive

One of the key advantages of owning a digital collectible over a physical collectible such as a Pokemon card or rare minted coin is that each NFT includes distinctive data that makes it both distinct and readily verifiable from any other NFT. This makes it futile to produce and circulate fake collectibles since each collectible can be tracked back to the original issuer.

Cannot be Openly Traded

NFTs cannot be openly traded with one another, unlike typical cryptocurrencies. This is because for those that live on the same platform, game or in the same set, no two NFTs are alike. Think of them as tickets for concerts. Each ticket includes detailed information, including the holder’s name, the event date and the location, making it impossible for festival tickets to be traded with another.

NFTs are Designed with Ethereum Specs

The vast majority of NFT tokens are designed using either two Ethereum token specifications (ERC-721 and ERC-1155). Ethereum blueprints allow app developers to quickly implement NFTs and ensure that they are compliant with the broader ecosystem, including MetaMask and MyEtherWallet exchanges and wallet services.

NFTs & Gamers

Gamers and enthusiasts will become the immutable owners of in-game objects and other exclusive properties and make money off them due to the introduction of blockchain technologies. In some instances, in virtual environments, such as The Sandbox and Decentraland, players can build and monetize systems in casinos and theme parks. Also, players can sell individual digital items on a secondary market that they accrue during gameplay, such as costumes, avatars, and in-game money.

NFTs for Artists

For artists, being able to market artwork directly to a worldwide marketplace of customers in digital form without having an auction house or gallery helps them to maintain a considerably more significant portion of the money they earn from purchases. Lindsay Lohan and YouTuber Logan Paul have both created their own digital collectibles based on NFTs

Royalties may also be programmed into digital artwork, such that any time their artwork is sold to a new owner, the artist makes a percentage of sales income.

Use Case

William Shatner, better known as “Star Trek” Captain Kirk, plunged into digital collectibles in 2020 and released 90,000 digital cards showing assorted pictures of himself on the WAX blockchain. Initially, each card was sold for approximately $1 and now offers passive royalty income to Shatner each time one is resold.

NFT Driven by Supply & Demand

Few NFTs also can make a lot of money for their operators. One gamer on the virtual land network, Decentraland, wanted to buy 64 lots and merge them into a single estate. Nicknamed Satoshis Tea Garden’s Secrets, it sold for $80,000 merely because of its favorable location and proximity to the road. In the F1 Delta Time game, another investor parted with $ 222,000 to buy a portion of a digital Monaco race circuit. The NFT reflecting the automated track requires the owner to collect 5 percent dividends, plus entrance ticket costs, from all races that take place on it.

The main market forces for rates are supply and demand, as all assets. People are also willing to pay a lot of money for them because of the low value of NFTs and the strong demand for them from gamers, collectors, and buyers.

For related articles, read DigiFinex Academy.

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