The blockchain industry is gradually gaining traction globally with millions of users joining the trend on a daily basis. In terms of categorization, different projects come with tokens (Fungible and/or Non-Fungible) that offer individuals the opportunity to earn passive income. Fungible tokens are those projects with constant value such as Bitcoin and Ethereum irrespective of the holders, while Non Fungible Tokens (NFTs) are somewhat different. It is from this background that this explainer unveils what NFTs are, in the simplest terms possible.
What Are NFTs?
Typically, Non-Fungible Tokens (NFTs) are digital assets that represent the ownership of unique items. They include internet collectibles that can be bought and sold like games, digital arts, music, videos, and tickets to an event. They are called Non-Fungible because they are unique, irreplaceable, and cannot be interchanged with other items. Recently, lots of users in the digital space have leveraged these assets to earn a fortune. If you are a newbie and wish to get started with this amazing crypto project? This article will guide you through the process.
How NFTs Work
When an artist mints (creates) an NFT, it creates a smart contract with a unique ID (address) on the blockchain. This ID represents the owner and it changes once a buyer pays for the item. The blockchain will automatically acknowledge this transaction and change of ownership making it available for public view.
How to Buy NFTs
The process of buying an NFT is quite simple. They include the following;
1. Buy Ether from any reliable exchange (Coinbase) as NFTs mostly run on the Ethereum blockchain.
2. Sign up for a non-custodial crypto wallet like Metamask to store your assets.
3. Move your ETH tokens to your Metamask wallet.
4. Join Opensea or any NFT marketplace for artworks and synchronize the site with your wallet.
5. With your ETH coins, you can then buy and store NFTs from the marketplace in your wallet.
How to Value an NFT
The best way to make money as a buyer in the NFT space is to buy low and sell high. But, 99% of NFTs in the marketplace may never increase in value. Hence the following tips will help you to determine the ideal one to buy.
1. Are NFTs useful outside being an artwork? The answer is “YES”, just that you have to explore NFTs that have real-world utility.
2. Projects created by celebrities with limited supply (a high rarity) are always desirable.
3. The project or art piece should be unique and different.
With millions of NFTs existing in the Marketplace, choosing the best NFT project is always challenging. But always bear in mind that the “Do Your Own Research” approach is essential before investing on any NFTs, rather than just going with hearsays or hype. With a parallel dimension growing immensely on the metaverse, NFTs will be the key anchor for the future of the digital ecosystem.
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