Novelty

What is Non Fungible Token? How to Buy NFT

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There is a lot of hype around Non Fungible Tokens. What with news of people making millions of dollars from the sale of prized NFT assets.

But even as the hype grows, it is clear that there’s a huge number of potential investors still trying to decipher what the NFTs entail.

So What is an NFT?

NFT stands for Non Fungible Token and the word “Non Fungible” in this case means that it is unique and cannot be replaced by something else.

For instance, bitcoin is fungible- to mean you can trade one for another bitcoin, and you’ll have exactly the same thing.

However, a one-of-a kind trading card, however is non fungible in the sense that if you traded it for a different card, you’d have something diametrically different.

In simple terms, an NFT is a digital asset that captures or represents real-world objects like art, music, in game items and videos.

Suffice it to say, NFTs are bought and sold online, often times with cryptocurrency.

Notably, they are generally encoded with the same underlying software as cryptos.

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NFTs have been around since 2014 but of late have been gaining notoriety as they are becoming a popular way to buy and sell digital artwork.

Now, How Do NFTs Work?

At an apex level, most NFTs are part of Ethereum blockchain, albeit other blockchains have implemented their version of NFTs.

Ethereum which is basically a cryptocurrency, just like bitcoin or dodecoin, also keeps track of who is holding and trading NFTs.

What is Worth Grabbing at NFT Market?

NFTs can really be anything digital, ranging from drawings, music, novel AI concepts. However, the current excitement revolves around using the tech to sell digital art.

nft

An NFT is a digital asset that captures or represents real-world objects like art, music, in game items and videos. PHOTO/COURTESY

So what’s the Point of NFTs?

This question is a bit subjective as it really depends on whether one is an artist or a buyer.

As an artist, you might be interested in NFTs as it provides a way to sell work that there otherwise might not be much of a market for.

Think of you coming up with a really cool digital sticker, GIF and stuff.

What’s more, some NFT market places have a feature where you can make sure you get paid a percentage every time your NFT is sold or changes hands.

As a buyer, you get to support financially the artiste you like. Also buying NFT also usually gets you some basic usage rights; think of being able to set the image online or set it as your profile picture.

As a Collector

NFTs can work as other speculative assets, like say stocks, where you buy it and hope the value appreciates one day and you make thousands, even millions of dollars.

How an NFT Differs from Cryptocurrency

While it’s generally built using the same kind of programming as cryptocurrency, like bitcoin or ethereum, the similarity ends there.

Physical money and cryptos are “fungible” in the sense that they can be traded or exchanged for one another.

This is to say they are also equal in value-one dollar for another dollar the same way one biotcoin is always equal to another bitcoin.

On the other hand, NFTs are different in the sense that each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible).

How Does an NFT work?

NFTs exist on blockchain. Now to simplify things at this point, let’s regard a blockchain as a distributed public ledger that records transactions.

NFTs are typically held on Ethereum blockchain, even though other blockchains support them as well.

An NFT is created or “minted” from digital objects that represents both the tangible and intangible items, including:

An NFT buyer gets an exclusive ownership rights and therefore NFTs can have only one owner at a time. The use of blockchain technology makes it easy to verify ownership and transfer tokens between owners.

 Should you Purchase NFTs?

The answer to this question is entirely subjective as the truth is, it is still risky because NFTs future is uncertain.

This is because the history is still scanty to judge their performance.

What’s more, NFT’s value is based entirely on what another person is willing to pay for it.

This is to mean, an NFT’s demand drives the price rather than basic, technical or economic indicators which commonly influence stock prices and at least generally form the basis for investor demand.

How Do I buy NFTs?

You need some key items to embark on the NFT collection journey and investment.

First, you’ll need a digital wallet that enables you to store NFTs and cryptos.

By the same token, you’ll likely need to purchase some cryptocurrency, like say Ether but this is dependent on what currencies your NFT provider accepts.

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Also, you can buy crypto using a credit card on platforms like coinbase, Kranken, eToro and even Paypal and Robinhood.

After this, you’ll be in a position to move it from exchange to your wallet of choice.

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