You should know the basics of NFT or Non-fungible tokens before investing in it. Similar to Bitcoin, NFTs were first introduced by blockchain technology. Non-fungible tokens or NFTs are digital assets on a blockchain network. It has distinctive metadata and codes to differentiate it from other tokens and each other.
Moreover, NFTs can remove intermediaries, creating a new market and simplifying transactions. The NFT marketplace is booming with all its great features that touch sports and other art forms. Read the article below to know more and learn why you should invest in NFT tokens before it’s too late.
Non Fungible Tokens (NFTs) Explained
Non-fungible tokens or NFTs are digital assets on a blockchain with unique metadata and codes. NFTs are even different from each other because of these codes. Other cryptocurrencies, such as Bitcoin and Ethereum blockchain, are fungible. It means they can use them for trading and exchange like real money.
However, unlike cryptocurrency fungible tokens, NFTs cannot be used for trading. It is mainly because cryptocurrencies look the same while NFTs don’t. For example, one Bitcoin has the same value as the other Bitcoin. It makes it suitable for digital market transactions.
Nevertheless, it doesn’t make NFTs worthless. You can use NFTs to represent an artwork or real estate. You can also use NFTs to connect with your favorite artists. There is no single non-fungible token that is the same as other NFTs. Their identity is non-transferable. If you try to “breed” one NFT to another, it will result in a third unique token.
Origin of NFT Traced
Quantum was the first known NFT. Anil Dash and Kevin McCoy created it in May 2014. Jennifer, McCoy’s wife, created a video clip that they registered on the Namecoin blockchain. During the Seven on Seven conferences at the New York City’s New Museum, they sold it to Dash for $4. At first, they called it monetized graphics.
In October 2015, Etheria was launched and demonstrated as the first NFT project. The demonstration happened at DEVCON1 in London. It was also the first developer conference of Ethereum. Only in 2017, the term NFT was widely proposed by the Ethereum Github.
After this, they released different projects, including some cartoon characters by Larva Labs on the Ethereum blockchain.
In the same year, CryptoKitties, an online game, was monetized by selling tradable cats NFTs. It called the attention of the public. In 2020, it experienced quick growth and achieved triple its value. On March 13, 2021, the NFTs created a buying frenzy. A total of US$1.4 million was sold within 24 hours.
As NFT grows, known brands also jump into it. It includes Star Trek, Walmart, Sports Illustrated, Yahoo, NYSE, Elvis Presley, and Ticketmaster.
NFT Digital Art and Digital Assets Expounded
The NFT marketplace has been booming since people knew its real value. You can buy NFTs for millions of dollars. NFTs run through blockchain networks, and people can also trace where the tokens go and who owns them at the moment. Even a digital file and digital art can count as NFTs. In NFTs, jpegs and video clips count as digital assets.
Similar to physical assets, NFTs have the ability to be sold and bought in the market. On March 21, 2006, Jack Dorsey, the CEO of Twitter and Square, tweeted, “just setting up my twttr.”
They sold it for over $2.9 million to the Bridge Oracle CEO, Sina Estavi. Estavi won over Justin Sun, a tech entrepreneur. Estavi also won the bidding of Elon Musk’s tweet for $1.1 million.
Beeple sold another NFT at Christie’s. At over $60 million, it is the most expensive NFT ever sold in an auction so far. Because of this, Christie’s names Beeple as one of the top three living artists, next to Jeff Koons and David Hockney, with the highest price in the world.
According to the editor-in-chief of Artnet News, Andrew Goldstein, the question now is to what degree NFT will impact the marketplace.
NFTs have great potential when it comes to art. The art collecting world adapted to the NFT marketplace easily, which resulted in a higher market value. While it’s not yet certain how far where the NFTs in digital artwork will go, some people see it as a great investment opportunity. Some people have speculated about the sudden interest of people in the token.
What is the difference between fungible tokens and non-fungible tokens? Is a non-fungible token a good investment? Let’s take a look at the differences between non-fungible and fungible tokens.
Non Fungible Tokens vs. Fungible Tokens
The content stored and market data are the primary difference between non-fungible and fungible tokens. It tells what digital assets they can store and how they generate income. Although both run in the crypto world, fungible tokens, such as Bitcoin and Ethereum, are tradable and exchangeable.
Crypto tokens become fungible once they have a code script. For instance, you should create certain agreements if you want to have smart contracts through Ethereum. Fungible tokens are also divisible. It means that you can have similar value as the crypto. If the value of BTC in New York is $40,000, it will be the same in California.
On the other hand, non-fungible tokens are non-divisible and are all unique. Non-fungible tokens store unique data and digital assets like art, video games, sports, videos, and even selfies or profile pictures.
Bidding or auction is usually the way of ownership. It is also non-replicable as it contains specific information. It can also belong to a single person and the transfer is also given to one. You cannot see the intrinsic value of it.
For instance, a house deed is non-fungible because you cannot have similar legal papers with the same asset. Non-fungible tokens can either be physical or intangible assets. You can sell NFTs through blockchains or a Facebook post. Buying NFTs can also happen anywhere.
The job of the crypto blockchain is to make sure that someone has ownership of the NFT. Investing in NFTs is a good step if you want to own unique digital assets, such as services, music composition, academic titles, etc.
Examples of Non-Fungible and Fungible Tokens in Blockchain Technology
The Ethereum blockchain developed the first fungible tokens known as ERC-20. The ERC-20 tokens boosted the initial coin offerings era, worth around $15 B between 2016 and 2018. Around 2012, non-fungible tokens made their debut with the colored coins concept. It allows the metadata of other blockchains to attach to existing chains which saves developers from creating new ones.
Smart contracts create ERC-20 tokens. They can use them to record balances and facilitate transactions. The first NFTs were also created by Ethereum and used for services, utility, and personalized content. NFT marketplaces store academic titles, sports NBA top shot, and real-world objects. Though they are not tradeable, they can easily be traceable because they are still connected to a blockchain.
Only the Ethereum platform can use the ERC-20 token. It is different from the ERC-721. They follow different standards and protocols because one is fungible and the latter is non-fungible.
Now that you know the background and advantages of NFTs, let’s see why you should invest in NFTs before it’s too late. Here are some of the benefits and advantages of investing in this token in the future.
Why You Should Invest in NFT Before It’s Too Late
Investing is a good way to ensure your financial freedom. NFT investment is a great start. In NFTs, you can choose whether you want to own a physical or digital asset. Due to many people’s interest, NFTs are one of the most successful in the cryptocurrency world.
Let’s look at some of the advantages of NFTs in crypto trading.
Verifiable Record of Authenticity and Ownership
Good personal finance shows authenticity and transparency. NFT is a digital asset that you can also check in stocks. Blockchains store data in real-time. So if someone owns an NFT, you will see the asset’s ownership shown. Each block in a blockchain is linked to one another. It is hard for someone to take over the path or hack it.
A blockchain keeps the NFTs public. It shows more transparency and authenticity. Another good thing about it is that you can store it in a digital wallet. Like other crypto tokens, you can also see your NFT’s worth.
More Accessible and Smoother Transactions for Artists
Aside from being available in the whole market, some people also hold auctions to ensure that many people can participate. You can buy NFTs in NFT sales. Digital works allow for smoother and more accessible transactions between artists and their fans. Since NFTs are on almost every social media platform, it is more convenient for investors to buy NFTs.
To ensure that the transaction will go well, you have to use the right wallet. You can either use Trust Wallet, Coinbase, and MetaMask. Aside from the Ethereum platform, Binance Smart Chain, Polkadot, EOS, and Tron allow easy NFT transactions.
Even though NFTs are non-tradeable, you still need to ensure that it is transferable. The easy transfer gets five stars when it comes to any transactions.
Security of Records by the Blockchain Technology
Blockchain technology has advanced security programs and protocols to prevent hacking as much as possible. A single blockchain is made of several blocks. These blocks can either be provided by a group of miners or some validators. Moreover, these groups of people add to the security of the blockchain.
Since NFTs are still connected to blockchains, they are also secured. Duplication or deletion of data and assets are prohibited. If NFTs stand alone, it will be hard for the seller and buyer to verify legit and scam activities.
Diversified Financial Portfolio
NFTs investment holds lots of potential when it comes to stocks and shares. NFTs are not limited to a one-way exchange. You can diversify your financial portfolio by owning some NFTs of different kinds. Investors are now taking more risks when it comes to NFTs. They hope that this could be the next breakthrough in the crypto world.
NFTs can come in different shapes and sizes. Investors can hold art collectibles, sports tickets, and virtual plots in a video game. Having a wide variety of NFTs can help you gain more return from your investments. This crypto-asset increased drastically in NFT trading volume. The first half of 2021 gave a promising increase in volume. Investing in art and other related assets in NFT can increase your chance of earning.
High Potential for Value Growth
In the past few years, NFT has shown its ability to grow in value. Some known personalities can sell NFTs for millions in just a small amount of time. Because of this trend, we can see that there is no other way for NFTs to go up.
More investors are taking their time to learn what NFTs are and how they can start investing in them now. Most NFTs are sold as digital art for collectors and fans. In 2022, the NFTs are still expected to gain more trust from investors around the globe
Element of Excitement in every NFT Purchase
NFTs are very different from other crypto tokens that you can purchase. It involves the element of excitement because of the possible collectibles that you can own. If you are investing in NFTs, you are participating in technological growth.
It has a great potential of growing based on the trend and its advancements. Many people believe that technology can shift consumer behavior in a few more years, just like the internet. You can deny that you get more excited if you have purchased your favorite digital asset.
The Future of NFT
As technology advances and takes over the world, NFTs can be a representation of owning properties and other assets. Both NFTs and fungible tokens can help digitization happen. You can also use both of them to store real-life assets.
NFTs are under revolution and improvement as people continue to embrace them. They are becoming more in demand and more popular. Aside from that, their value continues to increase and helps the economy to grow as well.
However, the future of NFTs depends on how much people are willing to pay for them. If the demand is high, then the price will increase as well. NFTs can also have an environmental impact, which you should be aware of.
It’s not yet too late to invest in NFTs. The many benefits of this token make it a worthy investment. The future of NFT depends on how much money people are willing to offer for certain properties or assets. Nevertheless, NFTs are taking off and it is leaving a good track record for those who are still yet to join the group.