Imagine selling a tweet for $2.9 million or a cat gif for $561,000. These are situations that happened in real life and are all attributed to NFTs. If you are reading this then chances are that you have heard about NFTs from your favourite creator or some of the popular blogs. Today, we demystify every important aspect of the Non-Fungible Tokens and why they are so popular.
Don’t let the name scare you as we dive into how individuals use tech to sell digital art. If you are a tech enthusiast then you have probably heard about bitcoin, blockchain and recently some news revolving around NFTs.
To understand how this works, you need to focus on the word fungible which means interchangeable. In the economics aspect, money is fungible because it has various denominations.
For example, you can swap $10 to two $5 bills without gaining or losing value. The same applies to assets such as gold, shares and cryptocurrencies. On the other hand, an NFT is a one-off asset and when you split it, you tend to lose its value.
Good examples of non-fungible assets include a house or trading card. When you split any of this you will definitely remain with something of a lesser value. For digital art, a painting is the best example. Although some artists can duplicate various pieces of art, the original one will always remain the same.
Technology plays a major role when it comes to making money using NFT. First, it stores NFTs data in a blockchain ledger and makes it unique using the principles of cryptography. It also makes the information public in the blockchain and hard to falsify. Therefore, NFT cannot be changed, stolen or adjusted and that is what makes them authentic.
Creators make their own digital assets such as a song, video, or piece of art which can be considered as an NFT due to their unique nature. However, the value is determined by how many people are willing to buy and the projection of its future price. To be sincere, anyone can create an NFT but in the long run, the demand is what matters.
The higher the demand, the higher the price! Therefore, to make money as a creator, you have to make your own NFTs that is totally unique from what already exists.
Only a few cryptocurrencies like Ethereum allows you to buy and sell NFTs. Therefore, to publicly trade, you have to invest in such cryptocurrencies that will grant you the purchasing power and ability to receive payment for each NFT sold.
The standard procedure is to start by opening a digital wallet. Most wallets automatically create an Ethereum account for individuals and if you already own cryptocurrency, you can transfer it to your wallet or else fund them by buying.
Once you have a credited digital wallet, search for NFT marketplaces online. You will find music, video games, fine arts, collectables, trading cards among others. Due to the availability of public information, you can see whether you are buying the NFT from the creator or a reseller.
It’s impossible to predict whether NFTs will still be a big deal 10 years from now. But that doesn’t mean that they are not profitable. Various creators like Beeple have made millions selling NFTs and this shows the potential in the niche. However, it is not the case for every creator and collector. If you would love to make money in this field, then start by studying the market and feel free to ask any question in the comments. Besides that, All the best.