Everything You Need To Know About Non-Fungible Tokens (NFTs)

Most artists use NFTs to monetise their artwork. (Photo: AFP)

New Delhi: If you are a netizen you must be aware that Non-fungible tokens (NFTs) are selling like hotcakes. From Amitabh Bachchan to superstar Rajinikanth, the biggest celebrities in India have launched their own NFTs. Along with them, global celebrities like Ellen Degeneres, Paris Hilton and Sunny Leone have also ventured into NFTs. But what are NFTs?Also Read – Violators of New Cryptocurrency Guidelines Could Be Fined Rs 20 Crore Or Get Jail Term: Report

NFT stands for Non-fungible tokens. They are cryptographic assets on blockchain with unique codes and metadata, according to investopedia.com. What distinguishes them from cryptocurrencies is the fact that they cannot be traded or exchanged in return for another NFT (non-fungible). Cryptocurrencies can be exchanged because they are identical to each other, each NFT, on the other hand, is unique in itself and cannot be exchanged for another NFT. Also Read – Cryptocurrency: No Proposal To Recognise Bitcoin As Currency in India, Says Centre In Parliament

NFTs are used to represent physical assets like music, artwork, sports moments and real estate, even toilet paper in some cases. The most hyped NFT is NBA Top Shot, according to investopedia.com. It allows the holder to collect NBA moments in the form of a digital card. A lot of NFTs have been sold for millions of dollars. Also Read – Crypto Bill May Shift Investors To Equity Markets: Experts

How are NFTs created?

NFTs are created or ‘minted’ from objects that may represent tangible or non-tangible assets, according to Forbes. These include:

  • Music
  • Art
  • Videos and Highlights
  • Video Game Skins and Avatars
  • GIFs
  • Collectables
  • Tweets (YES! Jack Dorsey sold his first Tweet for over a whopping 2.9 million dollars)

According to Forbes, NFTs are sold in digital card form. They are held on Etherum blockchain, primarily. An NFT has a unique owner at one time. They can be sold or transferred to another user via Blockchain technology. Due to this, the ownership can always be tracked.

Why Are Artists Selling Their NFTs?

Most artists use NFTs to monetise their artwork. They no longer need to rely on auctions and galleries to sell their art, as reported by Forbes. The artists can also program in royalties so that they get a percentage of the price every time their NFT is sold to another user. This can help them get a better income.

How To Buy NFTs?

To buy NFTs, a user needs to open a digital wallet that allows them to store cryptocurrency and NFT. In most cases, NFTs can only be bought for cryptocurrencies, according to Forbes.

  • First, you need to buy some cryptocurrency and store it in your wallet.
  • Then you can go to an NFT exchange and buy the NFT you like.
  • There are a lot of NFT exchanges operating in cyberspace today.

Caveat: Make sure that you do your research before buying any Non-fungible Token.

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Published Date: December 12, 2021 12:50 PM IST


Updated Date: December 12, 2021 1:00 PM IST