Explained: What is NFT exactly? How do they work?

Almost $70 million paid for a digital collage, nearly $3 million for the first tweet ever, and $160,000 made by a 12-year-old boy selling an NFT collection, you must be getting to hear such news everywhere over the internet and they have definitely fanned curiosity over NFT.

So let’s start with some basic questions

What is NFT Exactly?

Well NFT stands for Non-fungible tokens and it is termed as a one-of-a-kind digital asset that exists on a blockchain network. They aren’t fungible which means that they cannot be replaced by another identical item.

NFTs can be anything digital which includes drawings, music, collectibles, GIFs, or even video game skins. Anyone can create an NFT but no one can guarantee a hit sale or high bidding of it on the NFT market places as it should be unique artwork having a good appeal to the masses of the digital age.

If you are a good digital illustrator, music composer, or photographer then things will be a lot more straightforward for you in the NFT spectrum.

How NFTs function?

The non-fungible token is maintained on a digital ledger called blockchain which stores data electronically in a digital format with identical copies across each system of computer within a network. All kinds of Cryptocurrencies and NFTs make use of this distributed ledger for seamless and transparency of transactions.

Blockchain technology power applications like Smart Contracts are real game-changers as they can oversee all aspects of accordance from facilitation to execution.

Why NFTs are exploding this year?

Non-fungible tokens are no alien innovation as they have been all over the place since 2014. The most famous memes that exist on the internet are now being sold as NFTs. For instance, Bad Luck Brian, an iconic image was sold as an NFT for $36,000 in the cryptocurrency Ethereum, Disaster Girl meme photo raked in $500,000 in Ethereum and DOGE coin NFT was a huge theft as it was sold for a record-breaking $4 million worth of Ethereum. These are just a few examples of how much NFTs have mounted.

Sales of NFT have boomed this year and as per a report, the NFT market has topped $10 billion in transaction volume in Q3 of 2021.

What is the NFTs marketplace?

NFTs require a place to be bought and sold, and where this magic happens is known as the NFT marketplace. NFT marketplace is just like Amazon or Flipkart, where each website has a specific focus or niche.

Just like Netflix and Spotify, NFT platforms are made around the idea that the physical or digital content is limited in quantity, so it can be more be meaningfully owned and traded.

Future of NFTs?

Undoubtedly, NFTs are the future of digital art. The development of NFTs and their marketplace have provided numerous advantages to artists as the technology allows artists to register their artwork and sell them.

Many believe that NFTs are doing justice with the artists who were fading away from the mainstream market while some believe that it’s just another bubble that’s waiting to burst.