From NBA to grimes, to Banksy, to famous bands like Kings of Leon, Non-Fungible Tokens (NFTs) are the latest, hyped, and hottest crypto-trend for the digital space right now.
They are an exciting commodity to various collectors and crypto-currency fans, however, are they profitable, or should you invest your money in Non-Fungible Tokens or not? Let’s find out about the same in this article.
What are NFTs?
Non-Fungible Tokens are cryptographic assets on blockchain that are distinguished from each other with unique identification codes and metadata. Unlike all the other cryptocurrencies like Ether (ETH), Bitcoin (BTC), and Monero (MXR), Non-Fungible Tokens cannot be exchanged or traded at equivalence.
Non-Fungible Tokens can be any type of media like art, videos, games, music, etc. The term Non-Fungible refers to a unique and irreplaceable object.
For example: when you have 100 bitcoins, you can exchange them for other bitcoins, and the value that you have in hand will be the same. However, all the Non-Fungible tokens are unique, and therefore when you exchange one for another, the value will not be the same.
In the above example, Bitcoins are Fungible Token, which means, they are tradable for each other and have a constant value.
In simple words:
Have you seen pokemon cards?
There were many simple pokemon cards, however, there were various special cards too. Now the special card is much more valuable than a simple card and owning a special card used to be a big thing. The special card used to come with a heavy price tag and can be stolen too, however it was just physically possible.
However, this is a digital age, and therefore everything has gone digital, but if there will be a special digital card, it can be easily duplicated using the copy and paste feature. Now how can the specialty and the uniqueness of the special card be preserved in this digital age?
For this, Non-Fungible Tokens can be used.
The card can be transformed into a Non-Fungible Token, and therefore the card can be stopped from being copied, as the original card will have a unique due to the blockchain. Now, it is possible to have special cards and art pieces thanks to the Non-Fungible Tokens and blockchain.
Therefore now, Nintendo can sell digital pokemon collector items that cannot be copied or stolen. This has given birth to a leading-edge method. This will ensure that there is no stealing or copying of the item, and therefore, the collector’s item can maintain its uniqueness and specialty.
Characteristics of Non-Fungible Tokens (NFTs)
Here are the unique qualities of Non-Fungible Tokens that differentiate them from other Tokens:
Although the developers of Non-Fungible Tokens can create as many Tokens as they want, they often keep them limited so that they can be scarce to increase their price.
Although this is not the case with all Non-Fungible Tokens, they are often indivisible. You cannot break the Non-Fungible Tokens in half, and therefore you will have to buy the full Token.
This is the most highlighted feature of Non-Fungible Tokens. They can record their uniqueness on their permanent information tab. This tab is like a certificate of authentication.
Advantages of Non-Fungible Tokens
Non-Fungible Tokens have brought a new dimension to the digital stage. Here are some of the advantages of Non-Fungible Tokens:
Other than exchange-traded Non-Fungible Tokens, they are bought and sold in special marketplaces. The price is decided on the uniqueness of the Non-Fungible Tokens.
Non-fungible Tokens are powered by Blockchain technology. Moreover, a Non-Fungible Token cannot be duplicated, and therefore this serves as proof of authentication.
— Ownership rights
Once the Non-Fungible Token is created, no one can edit or alter the information tab of them, and therefore it preserves the ownership rights.
What are fungible tokens?
A fungible token is an asset that can be interchanged with an asset of the same value or can be redeemed by simplifying and adding up to the right value. It simplifies the trading, buying, and selling process of the tokens.
The value of all the cryptocurrencies is the same, and one cryptocurrency can be changed with another.
Difference between Fungible and Non-Fungibles Token
Fungible tokens are like cryptocurrencies. They have the same value and are interchangeable. They are uniform in nature, and are divisible too. All the fungible tokens fall under the ERC- 20 standards.
On the other side, Non-fungible tokens are all unique, and they cannot be divided. As they are unique, all the non-fungible tokens have different values and therefore they are not interchangeable. All the non-fungible tokens fall under the ERC- 721 standards.
In simple words:
Let’s say you borrowed $100 from your friend, and now you have to return the same. You can either return the same in full, or you can give them two $50 bills or ten $10 bills. The value of them all will be the same, and therefore you can divide the value and return the money.
This is what Fungible Tokens are like.
Now, let’s say, you have borrowed your friend’s bike, now you cannot divide the bike and return it, and therefore you have to return the full bike to your friend. This is how non-fungible tokens work.
They can be unique and cannot be divided.
How Non-Fungible Tokens (NFTs) work?
Ethereum is the platform where the majority of Non-Fungible Tokens are traded and created. However, Non-Fungible Tokens can be created and traded using various other platforms. We will focus on the Ethereum platform for now.
Ethereum’s blockchain is used to create Non-Fungible Tokens. They are “permissionless”, and therefore anyone can create them, buy them, and sell them. They are also “immutable”, and therefore Non-Fungible Tokens cannot be altered, which ensures the tokens’ safety.
Non-Fungible Tokens can be viewed by everyone and are always unique in nature.
So basically, Non-Fungible Tokens is like a collectable card that can be viewed by many but will belong to only one person at a time.
How to buy and trade Non-Fungible Tokens (NFTs)?
Unlike any other cryptocurrency, Non-Fungible Tokens are also bought and sold on various platforms. We will take Ethereum as our base platform for now. However, unlike other tokens, Non-Fungible Tokens cannot be bought in some amount, as you will have to buy a single or full token only.
In order to buy or trade Non-Fungible Tokens, you will first have to install Metamask, a browser extension that allows you to interact with Ethereum. Metamask is a digital wallet for Ethereum and all the tokens of Ethereum, including the fungible and fungible tokens.
After you have installed the Ethereum extension, you have to buy Ethereum so that you can use the same to buy Tokens. You can use your debit card or other payment options like Google Pay, Apple Pay, etc., to buy them.
However, you should be careful about which site you choose to buy the tokens from, as it is highly suggested that you use trusted sites only. You can visit “NBA top shot” to buy Non-Fungible Tokens, and if you want an exchange site to trade Non-Fungible Tokens, you can visit “Uniswap”.
Connect your Metamask wallet to these sites, and you are ready to buy your first Non-Fungible Token.
Crypto Kitties is a game in which you can breed collectible and adorable cats. You can buy and sell cats too. All the cats are unique and are owned by one owner only. Therefore, this game showcased the best use of Non- Fungible Tokens.
All the cats of the game are 100% unique, and they cannot be replicated, taken away, or destroyed. The cats are created with the help of Blockchains and are Non-Fungible Tokens.
The kitten craze took off to the next level, and people spent an estimated total of 7 Million Dollars on these cats. According to “The New York Times“, a single cat was sold at a whopping amount of $140,000.
This digital craze gave a boost to the rise of NFT – Non-Fungible Tokens.
Use Cases of Non-Fungible Tokens
Non-Fungible Tokens are useful in multiple scenarios, however, here are some of the most prominent use-cases of Non-Fungible Tokens:
Non-Fungible Tokens have a very impactful use-case in the gaming industry as they can be used to solve one of the most prominent problems/issues of the gaming industry. It can be used to solve the trading problem of rare and special characters, items, accessories, and so on. Non-Fungible Tokens will enable easy and secure transfer of all these.
2. Digital Assets
Recently, the first-ever tweet – “just setting up my twttr” was sold by Jack Dorsey on a digital auction. At the time of writing, this Non-Fungible Asset price went up to $2.5 Million. Likewise, many digital assets can now have ownership, and therefore, NFTs have opened a new door to buy and sell digital assets.
Non-Fungible Assets are seen as the warrior that fights against Identity Theft. Medical records, academic results, and such certificates that can be presented in digital form can be secured and proved genuine with Non-Fungible Tokens’ help. It can also be used for copyright purposes by various artists to secure their work.
All the digital things that can become a collector’s item can benefit from the Non-Fungible Tokens. This will enable the selling and buying of digital assets, which was next to impossible due to copy, theft, and ownership problems.
Why are Non-Fungible Tokens valuable?
If you are thinking of buying NFTs or you are simply interested in them, you may be wondering why these Non-Fungible Tokens have value? Let’s discuss the same.
When we take games like Crypto Kitties, the only reason why the game was a success and why the cats had so much value is because of people’s interest. They wanted to have a cool and unique-looking digital pet that they can play with. The only reason why people were ready to pay such prices for just a digital cat is interest.
Suppose, you are an NBA fan, then you will indeed spend money on having the character of your favourite player in the game, moreover, the market of Non-Fungible Tokens is global, and therefore more people will want to buy the same things, and thus this is why people are paying so much for Non-Fungible Tokens.
2. Valuable Things
In certain games, there are some rare and special items that are a must-have to get your hands on some other items or treasure. As these things are limited, only a few players will be able to get their hands on the same, and therefore such rarity makes them saleable. Moreover, with Non-Fungible Token, the item now belongs to you, and not even the game company can claim that item.
Special items and accessories have a great impact on the game, and therefore they are valuable. Moreover, they help to enhance the appearance of the character too.
Top 5 NFTs Crypto Website
The digital market is a very big space, and when you are using this marketplace for buying, selling, or trading purposes, you should use only trusted and genuine websites. It can often be confusing to find the right website for you when you have just stepped into this market. Therefore, we have created a list of the top 5 NFTs Crypto Websites that you can visit to buy, sell, or trade Non-Fungible Tokens:
Opensea is a Non-Fungible Token marketplace that is trusted by millions. The website can be used to buy, sell, and discover new, rare, and unique digital items. It is a hub of NFTs like Digital Arts, Gaming items, and other digital assets that are backed by blockchain.
Rarible is a marketplace in which digital artists and creators can list their NFTs for sale, and the buyers can buy the same from here. It is a marketplace + a distributed network built on Ethereum that enables the trade of NFTs without a middleman.
Mintable is a marketplace for Non-Fungible Tokens like arts, collectables, game items, music, videos, domains, and templates. The simple and attractive browsing options and listings make it easier and friendly to buy and sell NFTs on Mintable.
4. Nifty Gateway
Nifty Gateway is a premier marketplace to buy and sell digital arts and collectables in the form of Nifties or Non-Fungible Tokens. The marketplace is full of exclusive NFTs and often hosts various sales and offers to get NFTs at better rates.
5. Super Rare
Super Rare is a marketplace for Non_fungible Tokens that you can use to buy, sell, collect, and trade unique and single edition digital arts. The platform is powered by native cryptocurrency to the Ethereum network, which is used to buy, sell and trade the Non-Fungible Tokens.
The $69 Million NFT Stunt:
This is the story that tells and serves as an example that Non-Fungible Tokens is a slate that is unwritten and is a door that opens the way to various opportunities.
It is often believed by many that NFTs is a hype, and soon, the bubble will burst, however, the same things were said about Cryptocurrency, and you can see where cryptocurrency stands now!
Beeple sold a Non-Fungible Token for a whopping amount of $69 Million. This makes this NFT one of the most costly NFT ever sold. Apart from being valued for their uniqueness, NFTs are also valued based on the interest of the buyer in the asset and therefore, the prices of these tokens skyrocket.
Beeple quotes that “We’re just beginning to scratch the surface with NFTs.”
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Buying the NFTs as you like them, or to earn quick bucks is ok, however, investing in them is a different thing altogether.
As the investment you think is the best one now, it can turn into a disaster in a few years. The demand for the same NFT can become zero, and you may lose your investment money altogether.
However, people do invest in NFTs, and it should be done after thorough research of the market. You will also have to be patient as even a rare Babe Ruth baseball card required some time to become valuable.
It is the digital era, and therefore, NFT is considered to be the next big thing. We live in a time in which a single bitcoin (a digital currency) is valued at more than $50,000, and therefore the digital world has shown how profitable it is.