An Introduction to NFTs
First things first, what (the hell) is an NFT?
NFT (which is short for Non-Fungible Token) is an on-chain digital asset that represents ownership of a unique item, such as a piece of art, in-game item, music albums, domain names and so much more! They have distinctive identifying information and are generally encoded with the same underlying software as cryptos.
NFT's contain built-in authentication which serves as proof of ownership.
How can I really own something digital, e.g. an artwork?
Think about it like this, you own a physical piece of art, you know that it’s yours, because it's physically there hanging on a wall in your living area. But how do you know that something digital belongs to you?
Until recently, there was no effective instrument to track ownership of original digital items. It limited the possible ways for artists to monetize their digital creations to selling their physical copies, merchandise, or taking commissions. Now, it's possible with NFTs.
When you create an NFT, your item becomes inseparable from a "token". Essentially, you create an authenticity record, a proof of ownership, making it impossible to fake. It now exists in a secure shared database: blockchain.
This record comes with a set of metadata: name, image, description, and more, created once and securely stored on the blockchain. It also refers to the current owner of the piece.
Can’t you just screenshot an NFT and own it that way? Why are they worth so much?
Good point, and it depends on how you view NFTs. If you’re looking at it from a purely functional perspective, you’re not wrong because you can screenshot an NFT artwork and store it on your desktop.
However, there are several things you can’t do with just a screenshot. NFTs provide you with the ability to prove its ownership and scarcity, which are two factors in determining the monetary value of an NFT. If you’re hoping to trade it for profits in the future, a mere screenshot will not be able to help you unlock that layer of value.
Beyond that, some NFTs themselves have functional purposes. Many different types of value can be baked into the NFT token itself. For example, if your NFT also happens to be a playable avatar, you’ll be able to use it to navigate its native ecosystem which again, you cannot do with a screenshot. This provides you with both an enjoyable gaming experience and the ability to potentially earn profits from the ecosystem itself.
Characteristics of NFT's
NFTs have several characteristics that make them unique. Some of these are:
- NFTs are non-interoperable - This means that one NFT cannot be used in place of another NFT. This is because each NFT is unique, with its own set of characteristics and information.
- Verifiable - All data related to NFTs are stored on the blockchain, making them easy to trace across owners. This allows NFTs to be authenticated easily.
Indestructible - NFTs are indestructible because they run on blockchain technology and utilize smart contracts. The blockchain’s inherent transparency and immutability ensures that NFTs cannot be destroyed or duplicated.
What kinds of NFTs are out there?
NFTs have already seen a variety of use cases. The most widespread ones currently include digital art and in-game assets. Music, multimedia, domains, Defi applications (e.g. insurances) are also starting to get traction.
Is there any proof from the big players? Who has already issued NFTs?
Even though NFTs are a creation of the blockchain world, their benefits are already being recognized by significant players across industries.
You can read more about the big brands doing NFTs in the "How to make money on NFTs" section.
I'm not familiar with blockchain. Will it be hard for me to start?
There's nothing to be afraid of! Millions of people already use crypto, and you can easily join. The recent developments in the blockchain space make the user experience as easy and smooth as it can be. You will still need to get a wallet and buy some ETH to start — but we're offering a detailed guide on that here. Also, you can always find help in the Fangible community on Discord.
Where do I keep my NFTs?
All NFTs you create and buy live in your wallet. This is a home for your NFTs. It looks like (a very nice!) mobile app, a desktop app, or a browser extension. You also use this wallet for connecting to a marketplace, confirming transactions, putting something on and off sale, sending NFTs to someone. It is done in a couple of clicks. We offer a detailed guide on choosing your wallet, creating it, and topping it up in this guide.
Where do I buy and sell NFTs?
It depends on the type of NFT you’re looking for. NFTs can be bought and sold on marketplaces like Fangible (you've come to the right place!).
NFTs can also be obtained within their respective project ecosystems, by directly purchasing them with the projects native token.